P8.12 A resort hotel has total annual sales revenue of $1,000,000, variable costs of $350,000, and fixed costs of $570,000. The fixed costs include $80,000 a year for land rental lease. a. Calculate the hotel's breakeven point. b. If the owners had an equity investment in the hotel of $1,200,000, what level of sales revenue is required for an operating income (BT) repre- senting a 15% return on their investment? CASE 8 365 c. In a renegotiation of the land lease, the landowner has offered man- agement an alternative to the fixed lease currently being paid. The al- ternative is 10% of the resort's contribution margin. i. If management accepts this proposal, what would be the resort ho- tel's new breakeven point? ii. Calculate the indifference point. iii. Explain whether management should accept this proposal if next year's total sales revenue is expected to be $1,200,000. iv. Should management accept this proposal if next year's total sales revenue is expected to be $1,400,000