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The 40-room limited-service Residence Inn has an ADR of $80 and variable costs per room sold...

The 40-room limited-service Residence Inn has an ADR of $80 and variable costs per room sold of $60. Assume there is no other sales activity. Its annual fixed costs total $180,000.

  1. If they desire their property to generate a pretax profit of $100,000, how many rooms must be sold?
  2. What is the occupancy percentage for the Inn when pretax profit earned is $100,000?
  3. Determine the Contribution margin (CM).
  4. If the Inn sells only 7,000 rooms, the loss for the year?

Part B

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