Exercise 2 (Hotel)
A 200 room hotel has an annual fixed cost of $1,000,000 and a profit goal of 12%\return on investment $5,000,000. With an average room rate of $78 and average\variable cost of $34, $P_f = 12\% \times 5,000,000 = $600,000$\$M_u = P_r - V_u = 78 - 34 = $44$ $CM\% = \frac{M_u}{P_r} = \frac{44}{78} \approx 56\%$\Determine the annual number of room sales and revenue required.\$S_u = \frac{FC + P_f}{CM_u} = $\$S\$ = $S_u \times P_r = $