Question
West Coast Hotel has 150 rooms. The occupancy rate varies between 50% and 90% per month, but the average occupancy rate is generally 80%. In
West Coast Hotel has 150 rooms. The occupancy rate varies between 50% and 90% per month, but the average occupancy rate is generally 80%. In other words, on average, 80% of the hotels rooms are occupied by guests. At this level of occupancy, the hotels operating costs are $84 per occupied room per day, assuming a 30-day month. This $84 figure contains both variable and fixed cost elements. This average cost figure drops to $79 when the occupancy rate is 90% (typically during the months of July and August). During June, the hotels occupancy rate was only 50% and a total of $254,100 in operating costs was incurred during the month. Required: 1-a. Using theUsing the high-low method, estimate the variable cost per occupied bed on a daily basis. (Round your answer to 3 decimal places.)
1-b. Using the high-low method, estimate the total fixed operating costs per month. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)
2. Assume an occupancy rate of 70% per month. What amount of total operating cost would you expect the hotelto incur? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)
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