Question: 2. Estimate the total fixed operating costs per month. Prairie Motels has a total of 1,400 rooms in its chain of motels located in eastern


2. Estimate the total fixed operating costs per month. Prairie Motels has a total of 1,400 rooms in its chain of motels located in eastern Canada. On average, 60% of the rooms are occupied each day. The company's operating costs are $25 per occupied room per day at this occupancy level, assuming a 30 -day month. This $25 contains both variable and fixed cost elements. During April, the occupancy rate dropped to only 35%. A total of $537,600 in operating cost was incurred during April. Required: 1. Estimate the variable cost per occupied room per day. (Do not round intermediate calculations and round your final answer to 2 decimal places.) 3. Assume that the occupancy rate increases to 50% during May. What total operating costs would you expect the company to incur in May? (Do not round intermedlate calculations.)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
