Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Prairie Motels has a total of 3,500 rooms in its chain of motels located in eastern Canada. On average, 40% of the rooms are

image text in transcribed

Prairie Motels has a total of 3,500 rooms in its chain of motels located in eastern Canada. On average, 40% of the rooms are occupied each day. The company's operating costs are $37 per occupied room per day at this occupancy level, assuming a 30-day month. This $37 contains both variable and fixed cost elements. During April, the occupancy rate dropped to only 30%. A total of $1,425,900 in operating cost was incurred during April. Required: 1. Estimate the variable cost per occupied room per day. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Variable cost per room per day 2. Estimate the total fixed operating costs per month. Fixed operating cost per month 3. Assume that the occupancy rate increases to 45% during May. What total operating costs would you expect the company to incur in May? (Do not round intermediate calculations.) Total expected operating cost

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Ethical Obligations and Decision Making in Accounting Text and Cases

Authors: Steven Mintz, Roselyn Morris

3rd edition

007786221X, 978-0077862213

More Books

Students also viewed these Accounting questions

Question

Complete problem 103 on gage 107 ot your course textbook

Answered: 1 week ago