Fixed Cost Analysis

Suppose you are evaluating the purchase of a small 20 room hotel whose revenue last fiscal year was $ 1.5M.  After thorough analysis, you determined it was losing $ 0.12 per dollar earned over that same period.

Suppose you also feel that it hasn't been managed properly, and that you feel you can turn it around to be profitable....especially if you can buy it at the right price.

To do so, you will incur some fixed costs.  What fixed costs are the most important that would be directly affected by the acquisition of the property?  Why do you think so?

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