1. The K&K Motel has 100 rooms and a swimming pool. Other activities such as vending machine sales and telephone sales are operated on a breakeven basis and may be ignored.

1. Compute the net income expected during June (a summer month) if 80% occupancy is achieved. (7 points)
2. Compute the breakeven point in the rooms sold during June. If 80% occupancy is achieved each night, on what day does the K&K break even? (2 points)
3. Compute the net income expected during November (a winter month) if 70% occupancy is achieved. (7 points)
4. Compute the breakeven point in the rooms sold during November. If 70% occupancy is achieved each night, on what day does the K&K break even? (2 points)

The K&K Motel has 100 rooms and a swimming pool. Other activities such as vending machine sales and telephone sales are operated on a breakeven basis and may be ignored.
					The cost structure of the K&K differs slightly by month based on season. The variable costs per occupied room are estimated as follows:
										Housekeeping	$ 4.00
Operating supplies	$ 2.00
Repair and maintenance	$ 1.00
Utilities (summer)	$ 0.50
Utilities (winter)	$ 2.00
Pool/maintenance (summer)	$ 0.50
Laundry	$ 1.00
Fixed Costs per month are estimated as follows:
Housekeeping - supervision	$ 2,000
Front office	$ 3,000
Administration	$ 6,000
Depreciation	$ 5,000
Pool costs (summer)	$ 2,000
Utilities	$ 1,000
Insurance and other	$ 2,500
Assume the average income tax rate is 30% of pretax income. The average daily rate of the K&K is estimated to be $35.00.