Motel 6 pioneered the economy-lodging brand in 1962. It now has 91,000 rooms in 1,000 locations (average is 91 rooms) in the United States and Canada. Suppose a particular Motel 6 has annual fixed costs of $1.2 million for its 100-room motel, average daily room rents of $50, and average variable costs of $10 for each room rented. It operates 365 days per year.

1. How much net income on rooms will Motel 6 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?