Reference no: EM132668086

Question - Leaders of a small Disney World Hotel Resort are trying to assess when their hotel will become profitable. They want to make sure that they have priced their rooms properly. Provided is the cost analysis for the resort:

Total fixed cost per month for the hotel is (electricity, phone bill, room service) $2,000.

Total variable cost per month for each room (guest supplies, breakfast F&B, etc.) is $ 60.

Room's sales rate is $185.

Using the cost analysis report numbers from the above scenario, answer the following questions and verify your answer(s) by providing your calculations:

How many rooms (round-up to the nearest room) need to be occupied to make the hotel start to generate a positive cash flow (i.e., profitable)?

If the hotel has 10 occupied rooms for the month of July, would it be profitable? If not, what should you recommend to the leaders?