Question
Resort Inns Inc, has a total of 2,000 rooms in its nationwide chains of motel. On average, 70% of the rooms are occupied each day.
Resort Inns Inc, has a total of 2,000 rooms in its nationwide chains of motel. On average, 70% of the rooms are occupied each day. The company's operating costs are $21.00 per occupied room per day at this occupancy level, assuming a 30-day month. This $21.00 figure contains both variable and fixed cost elements. During October, the occupancy rate dropped to only 45%. A total of $792,000 in operating costs was incurred during October. Required. 1. Estimate the variable cost per occupied room per day. 2. Estimate the total fixed operating cost per month. 3. Assume that the occupancy rate increases to 60% during November. What total operating costs would you expect the company to incur during November.
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