Jason Beck is the managing partner of a business that has just finished building a 60-room motel. Beck anticipates that he will rent these rooms for 12,000 nights next year (or 12,000 room-nights). All rooms are similar and will rent for the same price. Beck estimates the following operating costs for next year:

The capital invested in the motel is $1,040,000. The partnership's target return on investment is 30%. Beck 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.

Variable operating costs	$ 3 per room-night
Fixed costs
Salaries and wages	$180,000
Maintenance of building and pool	50,000
Other operating and administration costs	214,000
Total fixed costs	$444,000

What price should Beck 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
	$63	+	$3	=	$66	per room-night

What is the markup as a percentage of the full cost of a room-night? (Enter the markup as a percentage, X%.)

(	Markup per room		Full-cost per room	=	Markup as a % of full cost
(				=		% markup