Question
Great Eastern Inns has a total of 1,000 rooms in its chain of motels located in eastern Canada. On average, 60% of the rooms are
Great Eastern Inns has a total of 1,000 rooms in its chain of motels located in eastern Canada. On average, 60% of the rooms are occupied each day. The companys operating costs are $17 per occupied room per day at this occupancy level, assuming a 30-day month. This $17 figure contains both variable and fixed cost elements. During February, the occupancy rate dropped to only 50%. A total of $283,500 in operating cost was incurred during February. 1. Estimate the variable cost per occupied room per day. (Assume 30 days in a month. Do not round intermediate calculations and round your final answer to 2 decimal places.) 2. Estimate the total fixed operating costs per month. 3. Assume that the occupancy rate increases to 65% during March. What total operating costs would you expect the company to incur during March? (Assume 30 days in a month. Do not round intermediate calculations.)
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