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The 100 room limited service Pepper Inn has an ADR of $80 and variable costs per room sold of $15. Assume there is no other sales activity. Its monthly fixed costs total $100,000.
Problem 1: How many rooms must be sold to breakeven?
Problem 2: What day of the month does it break even if it averages a paid occupancy percentage of 60%? Assume all 100 rooms are available for sale each day.
Problem 3: If variable costs are reduced by $3 and fixed costs increase by $72,000 annually what are the monthly breakeven revenues?
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