### Calculate motel breakeven level of occupancy

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##### Reference no: EM132233895

The motel has 70 rooms and usually rents out in the following proportions. 45% of 70 rooms are singles sold at \$60 per night 35% of 70 rooms are doubles sold at \$74 per night 20% of 70 rooms are triples sold at \$ 90 per night The motel has annual fixed costs of \$445,000 and variable costs averages \$14 per room occupied. a. Calculate motel's breakeven level of occupancy? b. Calculate the occupancy percentage that will provide operating income (before tax) of \$65,000 a year? c. Calculate the occupancy percentage necessary to provide an operating income (before tax) of \$65,000, if the average room rate were decreased by 20%. d. Calculate the occupancy percentage necessary to provide an operating income (before tax) of \$65,000, assuming the average room rate will increase by 10%. Variable cost per unit sold will increase to \$16.00 and \$30,000 per year will be spent on advertising.

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