The Bonita Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $60 a night. Operating costs are as follows.

Salaries ...... $8,800 per month

Utilities ..... 2,400 per month

Depreciation ... 1,500 per month

Maintenance .... 800 per month

Maid service ...... 8 per room

Other costs ....... 37 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?