Suppose a Best Western motel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room motel, average daily room rents of $50, and average variable costs of $10 for each room rented. It operates 365 days per year. The amount of net income on rooms that will be generated if the motel is half full throughout the entire year is: a. $(1,192,500) b. $1,590,000 c. $2,737,500 d. $990,000

Suppose a Best Western motel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room motel, average daily room rents of $50, and average variable costs of $10 for each room rented. It operates 365 days per year. The amount of net income on rooms that will be generated if the motel is half full throughout the entire year is: a. $(1,192,500) b. $1,590,000 c. $2,737,500 d. $990,000

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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Question

Suppose a Best Western motel has annual fixed costs applicable to its rooms of $1.2
million for its 300-room motel, average daily room rents of $50, and average variable
costs of $10 for each room rented. It operates 365 days per year. The amount of net
income on rooms that will be generated if the motel is half full throughout the entire year
is:
a. $(1,192,500)
b. $1,590,000
c. $2,737,500
d. $990,000

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