A successful inn keeper who is looking to capitalize on the AirBNB model is looking to rent out a converted Assisted Living facility where he can rent out individual rooms and provide access to a shared living room and kitchen facility. The inn keeper would like your assistance in evaluating the potential profitability of this model. Based on his costs and forecast analytics, he predicts the following:

Fixed monthly cost for converted assisted living facility (assume 30 days per month)	$12,000
Estimated variable cost to set up and use the room per night	$51
Expected income per room per night	$92

SHOW YOUR WORK

a.	What is the equation for total cost per month.
b.	What is the equation for total revenue per month.
c.	If there are 13 rooms total, is it possible to break even? If so, on average, what percent of the rooms would need to be rented to break even?

Answer rating: 100% (QA)

a Total cost per month can be calculated by adding the fixed monthly cost to the variable cost per n... View the full answer