Managerial Accounting and Reporting
July 22, 2010
Case Study Analysis
Introduction to Skyview Manor Case Study
Skyview Manor is a case study set in 1962 in rural Vermont. Skyview Manor is an old, but well maintained property that has changed ownership several times over the past years. It does not have a restaurant or bar and is positioned as a mid-price, good quality "destination" resort hotel.
The principal question of the case study is whether Skyview Manor should remain open during the off-season. Currently, Skyview Manor is only operating during the skiing season which opens December 2 through March 31 (a total of 120 hotel operating days). If the hotel remains open during the off-season, Skyview Manor would operate 365 days a year.
The manager of the hotel, Mr. Kacheck, is concerned about off-season losses. In order to reduce off-season inactivity, he has proposed the following alternatives:
1. Stay open in the off-season and advertise
2. Stay open in the off-season, advertise, and add a heated/covered pool
3. Stay open in the off-season and add a heated/covered pool (no advertising)
4. Stay open in the off-season, advertise and add a seasonal pool
The Skyview Manor case focuses on the analysis of a resort hotel as an investment and takes a look at the different approaches that can be used to resolve the issues at hand. When looking at the most beneficial alternative several factors are needed:
Ã¢ÂÂ¢ The difference between fixed and variable expenses
Ã¢ÂÂ¢ Break-even analysis
Ã¢ÂÂ¢ Incremental contribution margin
Ã¢ÂÂ¢ Contribution Margin Income Statement
Ã¢ÂÂ¢ Cost volume analysis
Managerial Concepts Used for Case Analysis
To begin our analysis, Skyview Manor's Contribution Margin Income Statement must be analyzed for cost behaviors. A cost behavior refers to how a cost changes as an activity changes. Fixed...