Problem 1

The

King Hotel

has 400 rooms. Each room rents for $62 per day and has a variable cost of $12 per day.

The hotels monthly fixed costs are $450,000.

(Assume that each month has 30 days.)

Required:

1.

Compute the breakeven point in rooms

rented.

2.

Compute the daily occupancy percentage that the hotel must have in order to break even.

3.

Compute the total number of rooms that must be paid for and occupied

per month

to earn a profit of

$100,000?