Triatt Resort has 200 rooms.Each room rents at $130 per night and variable costs total $42 per room per night of occupancy.The fixed costs total $18,700 per month.If Triatt spends an additional $30,000 in June on advertising, it estimates it can expect an occupancy rate of 85%.What will be the monthly financial impact of spending this additional money on advertising over an occupancy level of 70% during June?

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Quizplus · Accepted Answer

The additional advertising will increase the occupancy rate from 70% to 85%. This will result in an increase in revenue of $130 * 200 * (85% - 70%) = $39,000. The additional advertising costs will increase the total costs by $30,000. Therefore, the profit will increase by $39,000 - $30,000 = $9,000.

Triatt Resort Has 200 Rooms