Copper Queen Hotel is interested in estimating fixed and variable costs so the h

Question

Copper Queen Hotel is interested in estimating fixed and variable costs so the hotel can make more accurate projections of costs, break-even and profits. The hotel is in a resort area and busy from November through March. In July and August, the hotel has only a 50 percent occupancy rate. Classify each of the following costs as fixed, variable or mixed.


A. Depreciation of the building
B. Salaries of restaurant staff
C. Salaries of hotel manager, desk manager, accounting clerks
D. Soap, shampoo and other toiletries in the bathrooms
E. Laundry costs (cost of bed linens, table cloths, cleaning products, depreciation on cleaning equipment.
F. Food and beverage costs
G. Grounds Maintenance

Explanation / Answer

Copper Queen Hotel is interested in estimating fixed and variable costs so the hotel can make more accurate projections of costs, break-even and profits. The hotel is in a resort area and busy from November through March. In July and August, the hotel has only a 50 percent occupancy rate. Classify each of the following costs as fixed, variable or mixed.


A. Depreciation of the building -------fixed,
B. Salaries of restaurant staff --------mixed.
C. Salaries of hotel manager, desk manager, accounting clerks ------fixed,
D. Soap, shampoo and other toiletries in the bathrooms -variable
E. Laundry costs (cost of bed linens, table cloths, cleaning products, depreciation on cleaning equipment.------mixed.
F. Food and beverage costs -variable
G. Grounds Maintenance------fixed,

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