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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Step 1

Revenue is the amount that a company earns from normal activities conducted by the business for example: revenue from sales of goods and services, interest received, royalties received etc

Step 2

The extra revenue gained from overbooking= $199.99 × 10= $1,999.9
The extra cost incurred by the hotel to walk one guest= $99 + $15= $114
The extra cost incurred by the hotel to walk 10 guest= Cost of one guest × 10

= $114 × 10= $1,140

Net revenue= $1,999.9 - $1,140= $859.9
The other factors that T must consider apart from cost are:

The taste and preference of consumers
The no. of rooms available at the hotel
Other usable resources available for the customers.

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