Use the fol lowing information to answer questions 8 -9 : The Sunrise Hotel has
ID: 2634740 • Letter: U
Question
Use the following information to answer questions 8-9:
The Sunrise Hotel has 200 rooms. Each room rents at $110 per night and variable costs total $27 per room per night of occupancy. Fixed costs total $76,000 per month.
8.
If the hotel spends an additional $20,000 in the month of February on advertising they feel that they can expect occupancy rate to increase by 10%. What would be the financial impact of spending this additional money on advertising for the month of February (28 days)?
A)
Total fixed costs will increase by $10,500.
B)
Net income will increase by $16,320.
C)
Net income will increase by $26,480.
D)
Total fixed costs will remain the same.
9.
If 75% of the rooms are occupied each night in the month of February (28 days) what will total costs be for the month?
A)
$189,400
B)
$173,600.
C)
$197,400
D)
$155,680.
8.
If the hotel spends an additional $20,000 in the month of February on advertising they feel that they can expect occupancy rate to increase by 10%. What would be the financial impact of spending this additional money on advertising for the month of February (28 days)?
A)
Total fixed costs will increase by $10,500.
B)
Net income will increase by $16,320.
C)
Net income will increase by $26,480.
D)
Total fixed costs will remain the same.
Explanation / Answer
8.B)
Net income will increase by $16,320.
9.D)
$155,680.
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