Prairie Motels has a total of 4,000 rooms in its chain of motels located in eastern...
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Prairie Motels has a total of 4,000 rooms in its chain of motels located in eastern Canada. On average, 80% of the rooms are occupied each day. The company's operating costs are $84 per occupied room per day at this occupancy level, assuming a 30-day month. This $84 contains both variable and fixed cost elements. During April, the occupancy rate dropped to only 40%. A total of $6,000,000 in operating cost was incurred during April. Required: 1. Estimate the variable cost per occupied room per day. 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 60% during May. What total operating costs would you expect the company to incur in May? Total expected operating cost Prairie Motels has a total of 4,000 rooms in its chain of motels located in eastern Canada. On average, 80% of the rooms are occupied each day. The company's operating costs are $84 per occupied room per day at this occupancy level, assuming a 30-day month. This $84 contains both variable and fixed cost elements. During April, the occupancy rate dropped to only 40%. A total of $6,000,000 in operating cost was incurred during April. Required: 1. Estimate the variable cost per occupied room per day. 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 60% during May. What total operating costs would you expect the company to incur in May? Total expected operating cost
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