A motel has 70 rooms it usually rents out, in the following proportions: 45% singles at: $48.00 per night 35% doubles at: $62.00 per night 20% triples at: $72.00 per night The motel has annual fixed costs of $365,000 and variable costs averages $12.00 per room occupied.
a. Calculate the motel’s breakeven level.
b. Calculate the revenue level that will provide operating income (before tax) of $65,000 a year.
c. Calculate the revenue level necessary to provide an operating income (before tax) of $65,000, if the room rate was decreased by 15 percent.