BREAKEVEN ANALYSIS

6.

You own a 10 bedroom Bed and Breakfast

With the following,

$ 12,000 per month mortgage payment

$ 4,000 per month for the gardener and housekeeper

$ 9.00 per room for soap, towels etc.

$ 20.00 per room desired Net Profit

Assume a 30 day month

SOLVE FOR THE FOLLOWING:

a. The selling price per room per night AND the monthly breakeven point.

b. The monthly breakeven point if you raise the selling price calculated in A

above by $12.00.

c. The monthly breakeven point if you lower the selling price calculated in A

above by $3.00.

d. Which of the 3 prices would you charge? What factors should you consider?

e. What would your selling price and breakeven point be if you want to pay

yourself $50,000 per year?