The Bozeman Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $50 a night. Operating costs are as follows.

Salaries ..........$8,500 per month

Utilities ..........2,000 per month

Depreciation .........1,000 per month

Maintenance .........500 per month

Maid service .........5 per room

Other costs .........33 per room

Instructions

(a) Determine the inn’s break-even point in

(1) Number of rented rooms per month and

(2) Dollars.

(b) If the inn plans on renting an average of 50 rooms per day (assuming a 30-day month), what is

(1) The monthly margin of safety in dollars and

(2) The margin of safety ratio?