Suppose a Holiday Inn Hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room hotel, average daily room rents of $50, and average variable costs of $10 for each room rented.It operates 365 days per year.The break-even point in number of rooms rented is _____.
A)30,000 rooms
B)24,000 rooms
C)120,000 rooms
D)none of these answers is correct

Question

Quizplus · Accepted Answer

The break-even point is the number of rooms that must be rented to cover the fixed costs. The fixed costs are $1.2 million, and the average daily room rent is $50. So, the hotel must rent 1.2 million / 50 = 24,000 rooms to break even.

Suppose a Holiday Inn Hotel Has Annual Fixed Costs Applicable