EX8-1

Please use the following information to answer the questions regarding a hotel. This assignment is for you to practice the equations in Slide 4 and 5. Do not over think the problems. They are straightforward. You only need to find the right equation or definition to use in each problem and apply the numbers in the question.

Room number	50
ADR	$65
Variable cost	$8 per room
Total fixed cost	$500,000

a. What is the variable cost percentage?

b. What is the contribution margin percentage?

c. What is the breakeven revenue?

d. What is the unit contribution margin (contribution per room)?

e. How many rooms should be sold per year to breakeven?

f. What is the occupancy rate required to breakeven?