The hotel has 125 rooms that it can serve provide to customer per night stay. Last year records show that the hotel usually has 92% occupancy for the New year holiday season from 28th December till 2nd January every year. The rooms are to sell at a rack rate of $129.99 per night.

Danny has been approached by the Australian Cricket Association to block 100 rooms (80% occupancy) every day from 28th December till 2nd January for $109.99 per room.

Purple Resorts Australia RM Committee are planning to find out whether Danny's offer would be beneficial or should they open for business as usual to operate with the forecasted 92% occupancy. The RM committee requires to differentiate explain which of their costs are fixed and variable and any recommendations to change from the variable to fixed costs or would that be better to stay as variable costs according to the cost behaviour and driver.

Forecasted Expenses for the period 28th Dec 2020 - 3 rd Jan 2021

Full time staff Salary $ 28,000.00

Casual staff wages $ 14,000.00

Electricity charges $ 4,800.00

water charges $ 5,600.00

Guests laundry charges @ 100 % occupancy

$ 1,522.00 Room Cleaning charges @ 100 percent occupancy

$ 9,132.00 phone

internet charges yearly charges $ 31,200.00

weekly bank charges $ 280.00

Required:

The DOSM, head of the RM committee has asked to prepare the following and submit a report to the RM committee with the following requirements below to decide about findings and recommendations to the RM committee of Purple Resorts.The DOSM would like to see these following for the committee

1. The Forecasted total cost and revenue for Danny's Proposal and normal occupancy

2. The Break-even units in rooms and dollars

3. Comparison of Danny's proposal with the normal occupancy and which would be yielding more?

4. Recommendation and Reason for Recommendation