Pondview Apartments is a 600-unit apartment complex. When the apartments are 90% occupied, monthly operating...
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Pondview Apartments is a unit apartment complex. When the apartments are occupied, monthly operating costs total $ When occupancy dips to monthly operating costs fall to $ The owner of the apartment complex is worried because many of the apartment residents work at a nearby manufacturing plant that has just announced it will close in three months. The apartment owner fears that occupancy of her apartments will drop to if residents lose their jobs and move away. Assuming the same relevant range, what can the owner expect her operating costs to be if occupancy falls to
Let's begin by determining the formula that is used to calculate the variable cost slope
Change in cost
Change in volume Variable cost slope
Now determine the formula that is used to calculate the fixed cost component.
Total operating cost
Total variable cost
Fixed cost
Use the highlow method to determine Pondview's operating cost equation.
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