50% singles @ $24.00 25% doubles @ $30.00 25% triples @ $36.00 Variable costs ha
ID: 2598904 • Letter: 5
Question
50% singles @ $24.00 25% doubles @ $30.00 25% triples @ $36.00 Variable costs have been calculated to average $8.50 per room occupied. Annual fixed costs are $225,800. Base your calculations on the assumption that 20 rooms are sold a) Calculate tho motel's breakeven occupancy percent- calculate the occupancy percentage that will give an operating income (before tax) of $20,000 per year percentage that will give an operating income before tax) of $20,000 per year if the average room rate decreased by 15 b) Occ% with $20,000 01: 05h c) Ooc% with $20,000 01 and 15% decrease AVG RM Rate: ZZ b) Occ% with $20,000 01: 56 c) Occ% with $20,000 Ol and 15% decrease AVG RM Rate: 702k b) Occ% with $20,000 01: 50% -occ% with S20.000 Ol and 15% AVG RM Rate:Explanation / Answer
1
Calculate motel break even occupancy percent:
60*50%*24
720
60*25%*30
450
60*25%*36
540
1710
Average room rate
$1710/60
$28.50
Fixed cost:
$225800/($28.50-$8.50)
Rooms sold
11290
Rooms available(60*365)
21900
occupancy (11290/21900)
51.55%
52%(rounded off)
2
occupany percentage that will give an operating income of $20,000 per year
Rooms sold:
[225800+20000]/$20
12290
Rooms sold
Rooms available(60*365)
21900
Occupancy
56.12%
56%
3
Operating income before income tax of $20,000 if the average room rate decreased by 15 percent
New selling price:
$28.50*85%
$24.23
Rooms sold:
[225800+20000]/[24.23-8.50]
15626.19
Rooms available(60*365)
21900
occupancy
71%
1
Calculate motel break even occupancy percent:
60*50%*24
720
60*25%*30
450
60*25%*36
540
1710
Average room rate
$1710/60
$28.50
Fixed cost:
$225800/($28.50-$8.50)
Rooms sold
11290
Rooms available(60*365)
21900
occupancy (11290/21900)
51.55%
52%(rounded off)
2
occupany percentage that will give an operating income of $20,000 per year
Rooms sold:
[225800+20000]/$20
12290
Rooms sold
Rooms available(60*365)
21900
Occupancy
56.12%
56%
3
Operating income before income tax of $20,000 if the average room rate decreased by 15 percent
New selling price:
$28.50*85%
$24.23
Rooms sold:
[225800+20000]/[24.23-8.50]
15626.19
Rooms available(60*365)
21900
occupancy
71%
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