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Prairie Motels has a total of 4 , 0 0 0 rooms in its chain of motels located in eastern Canada. On average, 8 0
Prairie Motels has a total of rooms in its chain of motels located in eastern Canada. On average, of the rooms are occupied each day. The companys operating costs are $ per occupied room per day at this occupancy level, assuming a day month. This $ contains both variable and fixed cost elements. During April, the occupancy rate dropped to only A total of $ in operating cost was incurred during April.
Required:
Estimate the variable cost per occupied room per day.
Estimate the total fixed operating costs per month.
Assume that the occupancy rate increases to during May. What total operating costs would you expect the company to incur in May?
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