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.
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.
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Salaries
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$8,800
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per month
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Maintenance
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$800
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per month
|
|
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Utilities
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2,400
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per month
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Maid service
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8
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per room
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|
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Depreciation
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1,500
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per month
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Other costs
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37
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per room
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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.
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Contribution margin per room =
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$60
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- (
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$8
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+
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$37
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)
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|
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Contribution margin per room =
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$15
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