XCHER hotel is a Spanish mountain lodge that has a high occupancy of skiers in the winter months and a low occupancy in the summer months. During winter months a relatively high room rate is charged and average occupancy levels are 90 % . During the summer months average occupancy is 30 % and a lower room rate is charged . The profit and loss analysis for the year is presented below. With respect to the semi- variable costs, there is a fixed electricity charge of 2.000 per six-month period and maintenance costs have a fixed cost component of 4.000 per six-month period Should the hotel close during summer (i.e. May-October)?

lsiUTS UH the basis of variable and fixed costs classification: should hotels close during the off season? XCHER hotel is a Spanish mountain lodge that has a high occupancy of skiers in the winter months and a low occupancy in the summer months. During winter months a relatively high room rate is charged and average occupancy levels are 90%. During the summer months average occupancy is 30% and a lower room rate is charged. The profit and loss analysis for the year is presented below. With respect to the semi- variable costs, there is a fixed electricity charge of 2.000 per six-month period and maintenance costs have a fixed cost component of 4.000 per six-month period. Should the hotel close during summer (ie. May-October)? Total November-April May-October 1.000.000,00 200.000,00 60.000,00 Sales 1.200.000,00 Variable costs 240.000,00 180.000,00 Semi-variable costs 28.000,00 8.000,00 Electricity 20.000,00 24.000,00 8.000,00 16.000,00 Maintenance 360.000,00 180.000,00 180.0 396.000,00 256.000,00 Fixed costs 652.000,00 Total costs 548.000,00 604.000,0056.000,00 Net profit