Question #2

The 100-room limited service Pepper Inn has an ADR of $80 and variable cost per room sold of $15. Assume there is no other sales activity. Its monthly fixed cost total $100,000.

1.How many rooms must be sold to break even?

2.What day of the month does it break even if it averages a paid occupancy percentage of 60 percent? Assume all 100 rooms are available for sale each day.

3.if variable costs are reduced by $3 and fixed cost increase by $72,000 annually, what are the monthly breakeven revenues?

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