Question: Great Eastern Inns has a total of 2 000 rooms in

Great Eastern Inns has a total of 2,000 rooms in its chain of motels located in eastern Canada. On average, 70% of the rooms are occupied each day. The company’s operating costs are $42 per occupied room per day at this occupancy level, assuming a 30-day month. This $42 figure contains both variable and fixed cost elements. During February, the occupancy rate dropped to only 45%. A total of $1,584,000 in operating cost was incurred during February.
1. Estimate the variable cost per occupied room per day.
2. Estimate the total fixed operating costs per month.
3. Assume that the occupancy rate increases to 50% during March. What total operating costs would you expect the company to incur during March?

View Solution:

Sale on SolutionInn
  • CreatedJuly 08, 2015
  • Files Included
Post your question