Norman Motels is a chain operating in small cities throughout the Midwest. Its most relevant measure of volume is the occupancy rate, the percentage of available rooms rented to guests. Monthly revenue is P100,000 per percentage point of occupancy. For example, at 40% occupancy, revenue is P4,000,000. Contribution Margin is 70%, and monthly fixed costs are P4,200,000.

Required:

1. Find the monthly break-even point in a) in Pesos, b) occupancy rate
2. Determine Normans profit at a 75% occupancy rate.
3. Determine the Occupancy rate Norman needs to earn P 700,000 per month
4. Determine whether Norman should increase advertising P100,000 per month if doing so increases the occupancy rate by two percentage points.