Jason Basset is the managing partner of a business that has just finished building a 60-room motel. Basset anticipates that he will rent these rooms for 17,500 nights next year (or 17,500 room-nights). All rooms are similar and will rent for the same price. Basset estimates the following operating costs for next year: (Click the icon to view the operating costs.) A Click the icon to view additional information.) Read the requirements. Requirement 1. What price should Basset charge for a room-night? What is the markup as a percentage of the full cost of a room-night? Begin by selecting the formula, then enter the amounts and solve for the room price per night. Target contribution margin per room-night Variable cost per room-night = Price per room-night per room- 41.56 night 665000 16000 = What is the markup as a percentage of the full cost of a room-night? (Enter the markup as a percentage, X%.) Price charged per room . Full-cost per room Markup as a % of full cost 27.06 % markup Requirement 2. Basset's market research indicates that if the price of a room-night determined in Requirement 1 is reduced by 10%, the expected number of room-nights Basset could rent would increase by 10%. Should Basset reduce prices by 10%? Show your calculations. Begin by calculating the new contribution margin which will help you make your decision. Select the formula first, then enter the amounts to calculate the contribution margin. (Round the new price per room to two decimal places. Round the contribution margin to the nearest dollar.). Choose from any list or enter any number in the input fields and then continue to the next question. ? Jason Basset is the managing partner of a business that has just finished building a 60-room motel. Basset anticipates that he will rent these rooms for 17,500 nights next year (or 17,500 room-nights). All rooms are similar and will rent for the same price. Basset estimates the following operating costs for next year: (Click the icon to view the operating costs.) Click the icon to view additional information.) Read the requirements. ( , . Price charged per room + Full-cost per room = Markup as a % of full cost 27.06 % markup Requirement 2. Basset's market research indicates that if the price of a room-night determined in Requirement 1 is reduced by 10%, the expected number of room-nights Basset could rent would increase by 10%. Should Basset reduce prices by 10%? Show your calculations. Begin by calculating the new contribution margin which will help you make your decision. Select the formula first, then enter the amounts to calculate the contribution margin. (Round the new price per room to two decimal places. Round the contribution margin to the nearest dollar.) New contribution = margin Should Basset reduce prices by 10%? Because the contribution margin at the reduced price is selling price you calculated in requirement 1, Basset the original contribution margin at the reduce the price of the rooms. Choose from any list or enter any number in the input fields and then continue to the next question. ? ILLIU IUUIT view auuluuild Hormation.) the requirements. 113 LC manup as a porcentayo UFLIC TOIT SLUI A TOUR CINCI UNIC Markup as a perconayo, 70.) Price charged per room + Full-cost per room Markup as a % of full cost up More Info quire equirer 0%. Sh ase by mula egin by irst, ther decimal The capital invested in the motel is $1,400,000. The partnership's target return on investment is 20%. Basset expects demand for rooms to be uniform throughout the year. He plans to price the rooms at full cost plus a markup on full cost to earn the target return on investment. New tribution hargin Print Done Should Basset reduce prices by 10%? Because the contribution margin at the reduced price is selling price you calculated in requirement 1. Basset the original contribution margin at the reduce the price of the rooms. Choose from any list or enter any number in the input fields and then continue to the next question ? s the managing partner of a business that has just finished building a 60-room motel. E at he will rent these rooms for 17,500 nights next year (or 17,500 room-nights). All rooms I rent for the same price. Basset estimates the following operating costs for next year: icon to view the operating costs.) (Click the icon to view additional information.) uirements, naye 0 Data Table st marku, $3 per room-night pcrease ald ent $ Variable operating costs Fixed costs Salaries and wages Maintenance of building and pool Other operating and administration costs Total fixed costs je formul two lac 171,000 35,000 179,000 $ 385,000 New contribut margin Bass Print Done e the contribution margin at the reduced price is price you calculated in requirement 1, Basset the original contribution margin at the reduce the price of the rooms
