The Sunnyside Motel’s rooms department has annual revenues of

€3.000,000 with accompanying variable costs of €900,000. The motel’s food department has annual revenues of €1,000,000 with variable costs of

€800,000. The fixed expenses of the motel are €1,100,000. The total revenues of the Sunnyside Motel come up to €4,000,000. Proceed with the following activities:

a calculate the breakeven point. Assume that the ratio of revenues from the rooms and food departments stay the same at all levels of activity b in order to boost restaurant revenues, the owners plan to carry out an advertising campaign that will cost €5,000. Assuming room revenues stay the same; determine the extra food revenues that need to be made to compensate for the advertising costs.