You have been given the following information on the next page about a hotel for the next year. The hotel has 40 rooms and expected occupancy rate of 70 percent. Rooms department, operating expenses, wages, supplies, laundry, and so on is 27 percent of room’s sales revenue.

a. Calculate the hotel’s average room rate for next year.

b. If the hotel did operate at 30 percent double occupancy and management wanted a $15 spread between the single- and double-room rates, what would these rates be?

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Administrative and general Marketing Energy costs Repairs and maintenance Property taxes Insurance Telephone department operating loss Contributory income, food and beverage departments First mortgage, at 8% interest, present balance Second mortgage, at 12% interest, present balance Ownership equity (after-tax return of 15% is expected) Book value of fixed assets before depreciation charges: Land Building Furniture and equipment (combined) Depreciation rate on building Depreciation rate on furniture and equipment (combined) Income tax rate $ 38,300 28,900 35,100 28,800 17,600 4,800 (9,700) 103,200 601,000 402,000 280,000 250,000 1,860,000 382,000 5% 20% 25%