Compute the break-even point in number of rooms rented

Assignment Help Finance Basics

Reference no: EM131815807

Question: Motel Rentals Super 8 , the world's largest budget hotel chain, was founded in 1972. It now has more than 120,000 rooms in more than 2,000 locations (average is 61 rooms) in the United States and Canada. Suppose a particular Super 8 has annual fixed costs of $900,000 for its 100-room motel, average daily room rents of $54, and average variable costs of $9 for each room rented. It operates 365 days per year.

1. How much net income on rooms will Super 8 generate (a) if the motel is completely full throughout the entire year and (b) if the motel is half full?

2. Compute the break-even point in number of rooms rented. What percentage occupancy for the year is needed to break even?

Reference no: EM131815807

Questions Cloud

Compute the break-even point expressed in total revenue : Cost-Volume-Profit at a Hospital Children's Hospital predicts variable costs of 70% of total revenue and fixed costs of $42 million per year for the coming year

Provide an example of a brand that you admire : Provide an example of a Brand that you admire. Why do you like the Brand and do you buy products or services from the company?

Compute the missing amount for merciercompany : Compute the missing amount for MercierCompany. You will need to work through owner's equity - Identify the formula to show the change in equity

Prepare an income statement showing revenues and expenses : Prepare an income statement showing revenues, expenses, pretax income, income tax expense, and net income for the year ended December 31, 2012

Compute the break-even point in number of rooms rented : Motel Rentals Super 8 , the world's largest budget hotel chain, was founded in 1972. It now has more than 120,000 rooms in more than 2,000 locations.

Definition-explanation of pluralism : Do you believe this provides further justification for stakeholder approach to business? Provide evidence

Analyze effective recruiting and selection strategies : Write a one page paper in which you: Analyze effective recruiting and selection strategies that can be used to meet organizational requirements.

Balance sheet and income statement : What is difference between balance sheet and income statement? Please provide examples.

Provide a more detailed rationale for choosing strategy : Provide a summary of the comparison of the selected company's financial ratios to those of a competitor

User Account

All Pages