Calculate the motel’s breakeven level

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Reference no: EM131041012

A motel has 70 rooms it usually rents out, in the following proportions: 45% singles at: $48.00 per night 35% doubles at: $62.00 per night 20% triples at: $72.00 per night The motel has annual fixed costs of $365,000 and variable costs averages $12.00 per room occupied.

a. Calculate the motel’s breakeven level.

b. Calculate the revenue level that will provide operating income (before tax) of $65,000 a year.

c. Calculate the revenue level necessary to provide an operating income (before tax) of $65,000, if the room rate was decreased by 15 percent.

Reference no: EM131041012

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