The Monthly Fixed Costs of Operating a 30-Unit Motel Are

question 127

Essay

The monthly fixed costs of operating a 30-unit motel are $28,000. The price per unit per night for next year is set at $110. Costs arising from rentals on a per-unit per-day basis are $12 for maid service, $6 for supplies and laundry, and $6 for heat and utilities.
a) Based on a 30-day month, at what average occupancy rate will the motel break even?
b) What will the motel's net income be at an occupancy rate of: (i) 40%? (ii) 30%?
c) Should the owner reduce the price from $110 to $94 per unit per night if it will result in an increase in the average occupancy rate from 40% to 50%? Present calculations that justify your answer.

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Definitions:

Genetic Abnormalities

Irregularities in the DNA sequence or chromosome structure that may lead to diseases, developmental disorders, or characteristic physical features.

Y Chromosome

The Y chromosome is one of the two sex chromosomes in humans (the other being X) and is associated with male biological characteristics.

X Chromosome

One of the two sex chromosomes, with females typically having two X chromosomes and males having one X and one Y chromosome.

Bipolar Disorder

A mental disorder marked by extreme mood swings from mania to depression.