The Empire Hotel is a full-service hotel in a large city. Empire is organized into three departments that are treated as investment centers. Budget information for the coming year for these three departments is shown below. The managers of each of the departments are evaluated and bonuses are awarded each year based on ROI.
| Empire Hotel |
|
Hotel Rooms |
Restaurants |
Health Club%u2014Spa |
| Average investment |
$ |
8,312,000 |
|
$ |
4,828,000 |
|
$ |
821,000 |
|
|
|
|
|
|
|
|
|
|
|
| Sales revenue |
$ |
10,000,000 |
|
$ |
2,000,000 |
|
$ |
600,000 |
|
| Operating expenses |
|
8,621,000 |
|
|
1,127,000 |
|
|
404,000 |
|
|
|
|
|
|
|
|
|
|
|
| Operating earnings |
$ |
1,379,000 |
|
$ |
873,000 |
|
$ |
196,000 |
|
|
|
|
|
|
|
|
|
|
|
|