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.

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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Salaries Utilities Depreciation Maintenance Maid service Other costs $8,500 per month 2,000 per month 1,000 per month 500 per month 5 per room 33 per room