Question
Ada Hotel sells two room tpes: standard rooms and deluxe rooms. Average daily rate (ADR) and variable costs (VC) of the two room types are
Ada Hotel sells two room tpes: standard rooms and deluxe rooms. Average daily rate (ADR) and variable costs (VC) of the two room types are provided in the table below: (Hint: Treat two room types as two different products.) ADR ($) Variable Cost ($) Standard rooms 394.50 256.43 Deluxe rooms 631.20 366.10 The Mock Hotel's fixed costs for a month is = = 252480 Sales mix (contribution of each room type to total room revenue) of the hotel is: Deluxe rooms 66% Standard rooms 34% Required: Using the information provided above, answer the following questions: a. What is the break-even room nights (number) for the the hotel given the sales mix of the two room packages? b. What must be the room revenue for the hotel to make a profit of $50,000 a month? c. If the hotel is considering an advertisement campaign for its rooms with a cost $5,000, hom much in room revenue should be generated to cover this extra cost?
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