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The Task Marketing Director, to produce a short report for the Board of Directors to address the following points. 1 . The apportionment of fixed costs over the three apartment types 2. The weekly variable cost per apartment 3. Breakable points for the upper and lower selling prices for each type of apartment 4. Maximum profit, for a year, obtainable for each type of apartment at both the upper and lower prices. (Using the price for an apartment/week and the weekly variable cost and the apportioned fixed cost for the apartment type). 5.
Any suggestions you may have for weekly rental prices of apartment/weeks and any other factors which you think that Universal Marketing should take into account when setting their final prices. Some graphical representation would be useful. The Directors may wish to ask you to explain your calculations. Hints Timeshare apartments are sold by the “apartment week” and people buy a particular calendar week which is then theirs to use every year. Some seasons of the year might be more expensive than others. The summer season would usually cost more than Autumn or Winter, the last week in December would be more expensive too.
If you have 6 apartments then you have 312 apartment weeks for sale, because there are 52 weeks in a year. Remember some variable costs are expressed per room and apartments have more than one room. Remember, some variable costs are expressed per occupant and that an apartment has a maximum number of occupants. Remember all fixed costs are given per year and the complex has a life of 30 years. For the rental of the unsold apartments you need to think not only in terms of the marginal cost but also the expectations of the apartment owners. A year should be taken as always having 52 weeks.