Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting A Managerial Emphasis

Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav

13th Edition

8120335643, 136126634, 978-0136126638

More Books

Students also viewed these Accounting questions