Suppose a Holiday Inn Hotel Has Annual Fixed Costs Applicable

Multiple Choice

Suppose a Holiday Inn hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300- room hotel, average daily room rents of $50, and average variable costs of $10 for each room rented. It operates 365 days per year. The amount of net income on rooms that will be generated if the hotel is completely full throughout the entire year is:

A) $5,475,000
B) $4,275,000
C) $3,180,000
D) $(1,188,000)