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Super 8 is the world's largest budget hotel chain found in 1972. It now has more than 120,000 rooms in more than 2,000 locations (average
Super 8 is the world's largest budget hotel chain found in 1972. It now has more than 120,000 rooms in more than 2,000 locations (average is 61 rooms) in the United States and Canada. Suppose a particular Super 8 has annual xed costs of $900,000 for its 100-room motel, average daily room rents of $54, and average variable costs of $9 for each room rented. It operates 365 days per year. Requirements 1. How much net income on rooms will Super 8 generate (a) if the motel is completely full throughout the entire year and (b) if the motel is half full? 2. Compute the break-even point in number of rooms rented. What percentage occupancy for the year is needed to break even? Requirement 1. How much net income on rooms will Super 8 generate (a) if the motel is completely full throughout the entire year and (b) if the motel is half full? Begin by determining the formula to calculate net income (loss), then calculate how much net income will be generated for (a) if the motel is completely full throughout the entire year and (b) if the motel is half full. (Use parentheses or a minus sign for net losses.) (8) 100% Full Fixed costs Variable costs Contribution margin I I Net income (loss)
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