calculate the occupancy percentage necessary to provide an operating income before t 593937
A motel has 70 rooms it usually rents out, in the following proportions:
45% singles at: |
$48.00 per night |
35% doubles at: |
$60.00 per night |
20% triples at: |
$72.00 per night |
he motel has annual fixed costs of $345,000 and variable costs averages $15.00 per room occupied.
a. Calculate the motel’s breakeven level and its occupancy percentage.
b. Calculate the occupancy percentage that will provide operating income (before tax) of $60,000 a year.
c. Calculate the occupancy percentage necessary to provide an operating income (before tax) of $60,000, if the average room rate were decreased by 15 percent.
d. Calculate the occupancy percentage necessary to provide an operating income (before tax) of $60,000, assuming the average room rate will increase by 10 percent. Variable cost per unit sold will increase to $16.20, and $30,000 per year will be spent on advertising.