Question Great Eastern Inns has a total of 2,000 rooms in its chain of motels located in eastern Canada. On average, 70% of the rooms are occupied each day. The company's operating costs are $42 per occupied room per day at this occupancy level, assuming 30-day month. This $42 figure contains both variable and fixed cost elements. During February, the occupancy rate dropped to only 45%. A total of $1,584,000 in operating cost was incurred during February. Required: 1. Estimate the variable cost per occupied room per day. (Assume 30 days in a month.) Variable cost S 12 per room per day 2. Estimate the total fixed operating costs per month. Fixed operating cost : per month 3. Assume that the occupancy rate increases to 50% during March. What total operating costs would you expect the company to incur during March? (Assume 30 days in a month.) Total expected cost
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Transcribed Image Text: Great Eastern Inns has a total of 2,000 rooms in its chain of motels located in eastern Canada. On average, 70% of the rooms are occupied each day. The company's operating costs are $42 per occupied room per day at this occupancy level, assuming 30-day month. This $42 figure contains both variable and fixed cost elements. During February, the occupancy rate dropped to only 45%. A total of $1,584,000 in operating cost was incurred during February. Required: 1. Estimate the variable cost per occupied room per day. (Assume 30 days in a month.) Variable cost S 12 per room per day 2. Estimate the total fixed operating costs per month. Fixed operating cost : per month 3. Assume that the occupancy rate increases to 50% during March. What total operating costs would you expect the company to incur during March? (Assume 30 days in a month.) Total expected cost
More Transcribed Image Text: Great Eastern Inns has a total of 2,000 rooms in its chain of motels located in eastern Canada. On average, 70% of the rooms are occupied each day. The company's operating costs are $42 per occupied room per day at this occupancy level, assuming 30-day month. This $42 figure contains both variable and fixed cost elements. During February, the occupancy rate dropped to only 45%. A total of $1,584,000 in operating cost was incurred during February. Required: 1. Estimate the variable cost per occupied room per day. (Assume 30 days in a month.) Variable cost S 12 per room per day 2. Estimate the total fixed operating costs per month. Fixed operating cost : per month 3. Assume that the occupancy rate increases to 50% during March. What total operating costs would you expect the company to incur during March? (Assume 30 days in a month.) Total expected cost
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TLATSP
Rooms at 70% occupancy1400 =2000*70% Cost at 70% occupancy1764000 =1400*42*30     Rooms at 45% occupancy900 =2000*45%     1    CostRooms High level17640001400 Low level1584000900 Difference180000500     Variable cost per room360 ... See the full answer