What do you recommend to management

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Question - A small Disney World Hotel Resort is trying to assess when their hotel becomes profitable. Provided are the cost-analysis for the resort:

1. Total fixed cost per month for the hotel (electricity, phone bill, room service) is $7,000.

2. Total variable cost per month for each room (guest supplies, breakfast F&B, etc.) is $10.

3. Rate sale per room is $150.

Required -

How many rooms need to be occupied to make the hotel generate a positive cash flow (i.e., be profitable)?

If the hotel has 40 occupied rooms for the month of July, would it be profitable? If not, what do you recommend to management?

Reference no: EM132646157

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