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E5-9 The Palmer Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at
E5-9 The Palmer Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at $60 a night. Operating costs are as follows. Salaries $5,900 per month Utilities $1,100 per month Depreciation $1,000 per month Maintenance $100 per month Maid service $14 per room Other costs $28 per room (a) Determine the inn's break-even point in (1) number of rented rooms per month and (2) dollars. (b) Determine the inn's margin of safety and margin of safety ratio assuming they rented 750 rooms for the month. (c)Using the original data in the problem, compute a new break-even point in units if the unit sales price is increased 10%, unit variable cost is increased by 10%, and total fixed costs are increased to $10,000
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