Answer:
It will price $45 per room
Step-by-step explanation:
We need to start from the formula for target profit in units:
fixed cost:
fixed costs $375,000
+ target income which is:
25% of 900,000 = 225,000
total 600,000
units (room nights) 15,000
Then, we solve for contribution margin to achieve this at 15,000 room per year:
contribution margin = 40
contribution margin is the difference in the sale price and the variable cost
sales price - variable cost = contribution margin
sales price = 40 + 5 = 45