Vermont’s PineCrest hotel has a restaurant and 90 double rooms and 60 single rooms. e average room rate for double rooms is $88 and the variable cost per double room night sold is $8. Single room nights sell for $56 and the variable cost per single room night sold is $6. the average occupancy for both types of room is 70 per cent. the hotel has annual fixed costs of $1,998,000.

Past records indicate the following:

• 90 per cent of guests staying in single rooms purchase breakfast in the hotel’s restaurant, and 50 per cent of single guests buy their dinner in the restaurant.

• 70 per cent of guests staying in double rooms purchase breakfast in the hotel’s restaurant, and 30 per cent of double room guests buy their dinner in the restaurant.

• the average contribution per breakfast cover sold is $8 and the average contribution per dinner sold is $20. the restaurant only serves hotel guests.

• For every 3 double rooms sold, 2 single rooms are sold.

• A double room sale signifies two guests and a single room sale signifies one guest.

Required:

a) What is the volume of double room and single room sales that must be achieved in order for the hotel to breakeven (assume the 3 double rooms to 2 single rooms ratio is maintained)?

b) What is the hotel’s current level of profit? Assume the hotel is open for 365 days per year.