Suppose the in & Out Motel Has Annual Fixed Costs

Multiple Choice

Suppose the In & Out Motel has annual fixed costs applicable to its rooms of $1.2 million for its 300- room motel, average daily room rents of $50, and average variable costs of $10 for each room rented. It operates 365 days per year. The percent of occupancy for the year needed to breakeven is:

A) 25%
B) 27.4%
C) 100%
D) 3.65%