Answer:
a. Price Blodgett should charge $45 (see below)
b. Markup percentage of the full cost of room night:
Markup = $15
Full Cost =$30
Therefore, percentage of markup to full cost = 15/30 * 100 = 50%
Explanation:
a) Costs Calculations:
Unit cost Total cost
Variable $5 $75,000 ($5 x 15,000)
Fixed Cost $25 $375,000 ($375,000/15,000)
Full Cost $30 $450,000 ($30 x 15,000, or $75,000 + $375,000)
Markup $15 $225,000 ($900,000 x 25% returns)
Price to charge $45 $675,000
