ohn 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 $16,000$ nights

next year $($or $16,000$ room$-$nights$).$ All rooms are similar and will rent for the same price. Beck estimates the

following operating costs for next year:

$$8$ per room$-$night

Variable operating costs Fixed costs

Salaries and wages $$177,000$

Maintenance of building and pool Other operating and administration costs Total fixed costs $$358,000$

$40,000$

$141,000$

The capital invested in the motel is $$1,000,000.$ The partnership$$s target return on investment is $25\%.$ 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.

Required

$1.$ of a room$-$night?

What price should Beck charge for a room$-$night? What is the markup as a percentage of the full cost