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?

AppendixLO1