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 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

 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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