Through using the high-low method, Regency Hotels estimates the total costs of providing room service meals to

Question:

Through using the high-low method, Regency Hotels estimates the total costs of providing room service meals to amount to $5,950 per month, plus 30 percent of room service revenue.

a. What is the contribution margin ratio of providing room service meals?

b. What is the break-even point for room service operations in terms of total room service revenue?

c. What would you expect to be the total cost of providing room service in a month in which room service revenue amounts to $15,000?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...