Use This Information to Answer the Next Two Questions $\bullet$ Fixed Costs: $120,000 Per Annum

Use this information to answer the next two questions. The following data relates to the Excelsior Hotel that provides overnight accommodation but no other services:
$\bullet$ Fixed costs: $120,000 per annum.
$\bullet$ Variable cost per room night sold: $10.
$\bullet$ Average selling price per room: $110.
$\bullet$ Annual after tax target profit: $144,000.
$\bullet$ Excelsior's profit taxed at: 40%
-What annual number of rooms sold does the Excelsior Hotel have to achieve in order to achieve its target level of profit?

A) 2,640
B) 1,200
C) 3,600
D) 3,140
E) None of the above

Correct Answer:

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