Sunny Beach Resort is a family-friendly budget resort. Management has projected 14,800 room rentals for the year,
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Question:
Sunny Beach Resort is a family-friendly budget resort. Management has projected 14,800 room rentals for the year, based on the 60-room resort. The capital invested in the motel is $1,500,000. The target return on investment is 20%. The resort, in an effort to earn the target return on investment, plans to price the rooms at full price plus a markup.
Using data in the attached Excel file (accessed through Module 1 or by clicking "Next" at the bottom of this page) address the following:
- What price should Sunny Beach charge for a single room rental per night? What is the markup
- as a percentage of the full cost of a single room rental per night?
- Market research indicates that if the price of a room-night determined in requirement 1 is reduced by 10%, the expected number of room-nights Sunny Beach could rent would increase by 10%. Should they reduce prices by 10%? Show your calculations.
Related Book For
Accounting for Decision Making and Control
ISBN: 978-0078025747
8th edition
Authors: Jerold Zimmerman
Posted Date: