Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed 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 hotel's rooms are occupied by guests. At this level of occupancy, the hotel's operating costs are $108 per occupied room per day, assuming a 30 -day month. This $108 figure contains both variable and fixed cost elements. This average cost figure drops to $103 when the occupancy rate is 90% (typically during the months of July and August). During June, the hotel's occupancy rate was only 50% and a total of $329,700 in operating costs was incurred during the month. Required: 1-a. Using 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 hotel to incur? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Marketing Research

Authors: David A. Aaker, V. Kumar , George S. Day

8th Edition

047123057X, 9780471230571

More Books

Students also viewed these Accounting questions