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1. A large leisure complex is in the process of re-organising its business. Based on the information provided below:

a. Complete the statement of cost for the four cost centres to show the budgeted total cost and the budgeted cost per customer day for each cost centre.

b. Based on your analysis of the completed Statement of Cost; calculate the price that would be charged for a customer to stay at the hotel for one week. They will require accommodation and catering for seven days, the use of leisure facilities for four days, and will require treatments on three of the days.

The complex is organised into four cost centres:

• Accommodation
• Catering
• Leisure
• Treatments

The proposal is to standardise the services on offer and sell a standard spa package to its customers. This will include accommodation, meals, use of the leisure facilities and a number of treatments.

Labour and material costs can be identified and are allocated to each of the cost centres in the proposed budget; however, other overhead costs will need to be apportioned between appropriate cost centres.

Statement of cost:

	Accommodation	Catering	Leisure	Treatments	Total
Labour	166,000	151,000	53,000	58,000	428,000
Materials	29,000	56,000	25,000	20,000	130,000
Power					127,000
Rent and rates					109,000
Depreciation					91,000
Advertising					116,000
Office expenses					362,000
You are also give following information:
	Accommodation	Catering	Leisure	Treatment
Floor area (sq metres)	1,801	601	899	301
Number of employees	49	25	37	13
Machinery value ($)	15,000	30,000	90,000	46,000
Kilowatt hours	7,501	3,650	18,751	1,501
Expected customer usage (days)	22,501	18,001	13,000	4,600

The assumptions upon which the proposed budget was based assume that customers will have the standard accommodation and catering package. The leisure facilities and the treatments will be optional. The spa operates a profit margin of 25% on selling price.

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