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Great Eastern Inns has a total of 1,200 rooms in its chain of motels located in...

Great Eastern Inns has a total of 1,200 rooms in its chain of motels located in eastern Canada. On average, 65% of the rooms are occupied each day. The company’s operating costs are $20 per occupied room per day at this occupancy level, assuming a 30-day month. This $20 figure contains both variable and fixed cost elements. During February, the occupancy rate dropped to only 45%. A total of $399,600 in operating cost was incurred during February.

Required: 1. Estimate the variable cost per occupied room per day. (Assume 30 days in a month. Do not round intermediate calc

3. Assume that the occupancy rate increases to 60% during March. What total operating costs would you expect the company to i

Required: 1. Estimate the variable cost per occupied room per day. (Assume 30 days in a month. Do not round intermediate calculations and round your final answer to 2 decimal places.) Variable cost 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 60% during March. What total operating costs would you expect the company to incur during March? (Assume 30 days in a month. Do not round intermediate calculations.) Total expected cost
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ReportAnswer #1
OCCCUPANCY RATE Rooms Occupied Total Cost
High LEVEL 65%                  780              468,000
Low Level 45%                  540              399,600
Change                  240                68,400
Change per unit (Variable cost) = Change in total cost / Change in Units Sold
    =68400 / 240
Variable cost 285 per room per day
Fixed Cost calculation
Variable Cost + Fixed cost = Total cost
   285 * 780 + Fixed Cost = 468000
Fixed op. Cost Fixed Operating Cost = 245700
3) If occupancy rate 60%
Rooms Occupied                                     720
Variable cost-total                             205,200
Fixed cost                             245,700
Total expected cost                             450,900
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