2. The YMCA rents low-cost rooms as an alternative to expensive hotels._____ It

Question

2. The YMCA rents low-cost rooms as an alternative to expensive hotels._____ It charges $10 per night for a dormitory room (shared with many others) or $20 per night for a small private room._____ Generally, three-quarters of their guest rent dormitory room. _______The variable cost for a dormitory room is $4 per night. The average cost for a private room is $6 per night._____ There are fixed costs of $100,000 per year related to the room (e.g., desk clerk, rent, heat). __________________1. How many people must stay at the YMCA every year for it to break-even??_______________________ 2. How many people will be in private rooms at the break-even point??

Explanation / Answer

let no. of people be X IN DORMITORY=3/4X IN PRIVATE ROOMS=X/4 TOTAL REVENUE=REVENUE FROM DORMITORY +REVENUE FROM PRIVATE=3/4X*10+X/4*20 TOTAL COST=TOTAL FIXED COST OF HOTEL+TOTAL COST OF PRIVATE ROOM +TOTAL VARIABLE COST OF DORMITORY=100000+365*6+3X/4*4 AT BREAK EVEN REVENUE=COST 3/4X*10+X/4*20=100000+365*6+3X/4*4 GET X NOW

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