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A 90-room motel has an average room rate of $64 and average occupancy of 77%. Its fixed costs are $800,000 a year, and its variable
A 90-room motel has an average room rate of $64 and average occupancy of 77%. Its fixed costs are $800,000 a year, and its variable costs total $500,000.
The owner wants to increase operating income from current level to $250,000. She decides to do the following adjustments:
- increase price by $6
- spend $30,000 more per year on marketing to compensate for the higher room rate
- To motivate the staff, the owner also set a $2,000 reward to the best employee
- Send guest fruits to each room, which costs $5 per room
How many rooms does she need to sell per night?
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