The 40-room limited-service Residence Inn has an ADR of $80 and variable costs per room sold of $60. Assume there is no other sales activity. Its annual fixed costs total $180,000.

1. If they desire their property to generate a pretax profit of $100,000, how many rooms must be sold?
2. What is the occupancy percentage for the Inn when pretax profit earned is $100,000?
3. Determine the Contribution margin (CM).
4. If the Inn sells only 7,000 rooms, the loss for the year?

Part B