The bonita inn is trying to determine its break-even point.
E6-1 The Bonita Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at a night. Operating costs are as follows.
|
Salaries Save your time - order a paper!Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines Order Paper Now |
$8,800 |
per month |
Maintenance |
$800 |
per month |
|
|
Utilities |
2,400 |
per month |
Maid service |
8 |
per room |
|
|
Depreciation |
1,500 |
per month |
Other costs |
37 |
per room |
Instructions
(a)(1) Determine the inn’s break-even point in number of rented rooms per month.
(a)(2) Determine the inn’s break-even point in dollars.
(b)(1) If the inn plans on renting an average of rooms per day (assuming a -day month), what is the monthly margin of safety in dollars?
(b)(2) If the inn plans on renting an average of rooms per day (assuming a 30-day month), what is the margin of safety ratio?
TUTORIAL PREVIEW
(a)(1) Determine the inn’s break-even point in number of rented rooms per month.
|
Contribution margin per room = |
$60 |
– ( |
$8 |
+ |
$37 |
) |
|
|
Contribution margin per room = |
$15 |
|
|||||
