Question
1. Pondview Apartments is a 1,000-unit apartment complex. When the apartments are 90% occupied, monthly operating costs total $231,300. When occupancy dips to 80%, monthly
1. Pondview Apartments is a 1,000-unit apartment complex. When the apartments are 90% occupied, monthly operating costs total $231,300. When occupancy dips to 80%, monthly operating costs fall to $225,600. The owner of the apartment complex is worried because many of the apartment residents work at a nearby manufacturing plant that has just announced it will close in three months. The apartment owner fears that occupancy of her apartments will drop to 55% if residents lose their jobs and move away. Assuming the same relevant range, what can the owner expect her operating costs to be if occupancy falls to 55%? Let's begin by determining the formula that is used to calculate the variable cost (slope). / = Variable cost (slope) Now determine the formula that is used to calculate the fixed cost component. - = Fixed cost Use the high-low method to determine Pondview's operating cost equation. y = $ x + $ Assuming the same relevant range, what should the owner expect her operating costs to be if occupancy falls to 55%? (Round your answer to the nearest whole dollar.) The owner should expect her operating costs to be $ , if occupancy falls to 55%. YOU ANSWERED: Total operating cost / Total variable cost = Variable cost (slope) Highest cost - Total variable cost = Fixed cost
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