Hotel Majestic is interested in estimating fixed and variable costs so that the company can make more accurate projections of costs and profit. The hotel is in a resort area that is particularly busy from November through February. In July and August, however, the hotel has only a 50 percent occupancy rate.
Required:
Classify each of the following costs as fixed (F), variable (V), or mixed (M) with respect to the number of hotel guests per month:
______a. Depreciation of the building
______b. Salaries of restaurant staff
______c. Salaries of administrative staff (hotel manager, desk clerks, accountants, etc.)
______d. Soap, shampoo, and other toiletries in rooms
______e. Laundry costs (cost of linens, cleaning products, depreciation of laundry equipment, etc.)
______f. Food and beverage costs
______g. Grounds maintenance