John Red is the managing partner of a partnership that has just finished building 60-room motel. Beck
John Red is the managing partner of a partnership that has just finished building 60-room motel. Beck anticipates that he will rent these rooms for 16,000 nights next year (or 16,000 room-nights). All rooms are similar and will rent for the same price. Beck estimates the following operating costs for next year:
Variable operating costs P30 per room-night
Fixed costs
Salaries and wages P1,750,000
Maintenance of building and pool 370,000
Other operating and administration costs 1,400,000
Total fixed costs P 3,520,000
The capital invested in the motel is P9,600,000. The partnership's target
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