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End of Chapter: Cost-Volume-Profit Analysis This case is a continuation of the Caesars Entertainment Corporation serial case that began in Chapter 1. The components
End of Chapter: Cost-Volume-Profit Analysis This case is a continuation of the Caesars Entertainment Corporation serial case that began in Chapter 1. The components of the Caesars serial case can be completed in any order. Caesars Palace Las Vegas made headlines when it undertook a $75 million renovation. During the renovation, the hotel closed its then- named Roman Tower, which was last updated 14 years prior, and started a major renovation of the 567 rooms housed in that tower. On January 1, 2016, the newly renamed Julius Tower reopened, replacing the Roman Tower. In addition to renovating the existing rooms and suites in the former Roman Tower, 20 guest rooms were added to the Roman Tower. With the renovation completed, Caesars expects the Julius Tower room rate to average around $149 per night. This increase, a $25 or 20.2% increase, reflects, in part, the room improvements. Assume that the annual fixed operating costs for the Julius Tower in Caesars Palace Las Vegas are $5,000,000. This amount represents an increase of $200,000 per year compared to pre-renovation. Also assume that the variable cost per hotel room night after the renovation is $27; before the renovation, the variable cost per room night was $20.
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