Using the high low method, Regency Hotels estimates the total costs of providing room service meals at $12,000 per month, plus 60 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 ter...

a Contribution margin ratio 40 100 minus variable costs of 60 b BreakEven Sales ...

Using the high-low method, Regency Hotels estimates the total costs of providing room service meals at $12,000

Question:

Using the high-low method, Regency Hotels estimates the total costs of providing room service meals at $12,000 per month, plus 60 percent of room service revenue.
a. What is the 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 $40,000?
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...