Jason Barrett Is The Managing Partner Of A Business That Has Just Finished Building A 60 Room Motel Barrett Anticipates 1 (90.16 KiB) Viewed 27 times
Jason Barrett is the managing partner of a business that has just finished building a 60-room motel. Barrett anticipates that he will rent these rooms for 12,000 nights next year (or 12,000 room-nights). All rooms are similar and will rent for the same price. Barrett estimates the following operating costs for next year: (Click the icon to view the operating costs.) i (Click the icon to view additional information.) Read the requirements. Requirement 1. What price should Barrett charge for a room-night? What is the markup as a percentage of the full cost of a room-night? Begin by selecting the formula, then enter the amounts and solve for the room price per night. + = Price per room-night + = per room-night
$ 3 per Variable operating costs room-night Fixed costs 171,000 Salaries and wages Maintenance of building and pool 33,000 240,000 Other operating and administration costs $ 444,000 Total fixed costs Print Done
The capital invested in the motel is $1,040,000. The partnership's target return on investment is 30%. Barrett expects demand for rooms to be uniform throughout the year. He plans to price the rooms at full cost plus a markup on full cost to earn the target return on investment. Print Done
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