A 60-room hotel near Land's End in Cornwall incurs annual fixed costs of 360,000. The hotel is open for 365 nights in the year and charges an average room rate of 68. The variable costs associated with room occupancy are 8 per room night. Required: At what room occupancy level would the hotel breakeven? At what level of sales would the hotel make a before tax profit of 60,000? If the hotel pays 40 per cent tax, how many rooms must be sold in order to make an after tax profit of 72,000

Answer rating: 100% (QA)

To determine the room occupancy level at which the hotel would break even we need to calculate the t... View the full answer