E6.1 Compute break-even point and margin of safety The Soma 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 Utilities Depreciation Maintenance Maid service Other costs $ 10,600 per month 2,400 per month 1,500 per month 800 per month 8 per room 34 per room Instructions a. Determine the inn's break-even point in (1) number of rented rooms per month and (2) sales 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? NOTE: Enter a formula, a cell reference, or a value (if you are unable to reference a cell), into the yellow shaded input cells. a. (1) Breakeven point in rooms Rental per room Variable cost per room Contribution margin per room $ 60.00 42.00 18.00 $ Fixed costs Contribution margin per room Break-even point in rooms $ $ 15,300 18.00 850 (2) Break-even point in dollars Contribution margin per room Rental per room Contribution margin ratio % Break-even point in rooms Rental per room Break-even point in dollars OR Fixed cost Contribution margin ratio Break-even point in dollars Break-even point in rooms Rental per room Break-even point in dollars OR Fixed cost Contribution margin ratio Break-even point in dollars b. (1) Margin of safety in dollars Expected rental revenues Break-even sales Margin of safety in dollars (2) Margin of safety ratio Margin of safety in dollars Expected rental revenues Margin of safety ratio