(Optimum Selling Price) The marketing department of Giggo Hotels has estimated the number of hotel rooms (it...
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Question:
(Optimum Selling Price) The marketing department of Giggo Hotels has estimated the number of hotel rooms (it has a capacity of 200) that could be sold at different price levels. This information is shown below:
Number of Rooms Sold | Price per Room per Night |
120 | $ 90 |
100 | 105 |
80 | 135 |
60 | 155 |
50 | 175 |
Giggo has estimated its variable costs at $25 per room per night. It also incurs costs of $10 per room per night for utilities, depreciation, and security, regardless of the occupancy rate.
- Calculate the occupancy rate that Giggo needs in order to maximize its profits.
- What occupancy rate does Giggo need to break even if its price was set at $125 and fixed costs were $15,000?
Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-0078025655
7th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old
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