The Bozeman Inn is trying to determine its break-even point. The inn has 75 rooms that are
Question:
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?
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Related Book For
Accounting Tools for business decision making
ISBN: 978-0470095461
4th Edition
Authors: kimmel, weygandt, kieso
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