2 (a) Refer to the Appendix. Calculate for location Y:

(i) break-even number of customers per month

(ii) monthly profit at maximum capacity

(iii) margin of safety.

(b) Refer to your results from 2(a), the Appendix and other information. Recommend to HHs directors whether to choose location X or Y for the new hotel.

around the current hotel locations Appendix: Data about location X and location Y Location X Location Y th 6 months 12 months Estimated time until opening of hotel Most likely target market Tourists Business customers $300 000 $500 000 $30 000 $69000 Capital cost of adapting building to HH standards Monthly fixed costs (including leasing cost) Variable cost per customer per night Estimated average price per customer per night $30 $40 $50 $70 4000 5000 Monthly capacity (customers) Expected monthly demand 3200 4500 Break-even number of customers per month 1500 See Question 2(a) Monthly profit at maximum capacity $50 000 See Question 2(a) UCLES 2017 9609/32/M/J/17