1 Operating costs Variable operating costs $9 per room-night Fixed costs Salaries and wages $ 174,000 Maintenance of building and pool 60,000 139,000 Other operating and administration costs $ 373,000 Total fixed costs i Additional information The capital invested in the motel is $1,350,000. The partnership's target return on investment is 25%. Bartlett expects demand for rooms to be uniform throughout the year. He plans to price the rooms at full cost plus a markup on full cost to earn the target return on investment. John Bartlett is the managing partner of a business that has just finished building a 60-room motel. Bartlett anticipates that he will rent these tooms for 17.500 nights next year (or 17,500 room-nights). All rooms are similar and will rent for the same price. Bartlett estimates the following operating costs for next year: Click the icon to view the operating costs.) (Click the icon to view the additional information) Required 1. What price should Bartlett charge for a room-night? What is the markup as a percentage of the full cost of a room-night? 2. Bartlett's market research indicates that if the price of a room-night determined in requirement 1 is reduced by 10%, the expected number of room-nights Bartlett could rent would increase by 5%. Should Bartlett reduce prices by 10%? Show your calculations. Requirement 1. What price should Bartlett charge for a room-night? What is the markup as a percentage of the full cost of a room-night? Begin by selecting the formula. Then enter the amounts and solve for the room price per night. (Round your answers to the nearest cent.) Price per room-night per room-night What is the markup as a percentage of the full cost of a room-night? (Round each value in the formula to three decimal places. Enter the decimals.) ) x 100 = Markup as a % of full cost ) x 100 = % markup Requirement 2. Bartlett's market research indicates that if the price of a room-night determined in requirement 1 is reduced by 10%, the expected number of room-nights Bartlett could rent would increase by 5%. Should Bartlett reduce prices by 10%? Show your calculations Begin by calculating the new contribution margin, which will help you make your decision Select the formula first, and then enter the amounts to calculate the contribution margin. (Round the new price per room to the nearest cent Round the contribution margin to the nearest dollar) = New contribution margin Should Bartlett reduce prices by 10%? (Round your answers to the nearest whole dollar.) Because the contribution margin of sat the reduced price is the original contribution margin of sat the selling price reduce the price of the rooms