The Nordic Nest is a new luxury motel that has recently opened in the Canmore area. Management is currently doing an analysis to determine what the results would be in a number of different situations. You have been hired as a consultant to provide the required analysis and you have been provided with the following information to assist you in this task:

Desired net income.$825,000

Annual fixed costs$1,285,000

Average daily room rate.$175

Average variable cost per room occupied$29.50

Number of rooms..95

Days opened each year.365

Proposed rate per room..$140

Average occupancy rate for March80.0%

Required:

(A) Taking into consideration provide the following calculations and present the results as asked:

(i) How many rooms must be rented annually to achieve the desired net income?

(ii) What is the occupancy rate required (expressed as a percentage) to achieve the desired results in (i)?

(iii) How many rooms must be rented each day to achieve the desired results in (i)?

(B) Taking into consideration provide the following calculations and present the results as asked:

(i) How many rooms must be rented annually in order to break-even?

(ii) What is the occupancy rate required (expressed as a percentage) to achieve the desired results in (i)?

(iii) How many rooms must be rented each day to achieve the desired results in (i)?

(C) A sports group from Europe is traveling to Canmore to compete in the World Cup ice climbing competition in March of the coming year. The group has offered to rent the entire motel for the month of March at the proposed rate above. Taking in the average occupancy rate for March should their proposal be accepted? (Provide a comparative analysis, using relevant information only, showing the results if the proposal is accepted and if the proposal is rejected.)