Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Karen Botosan operates a bed and breakfast hotel in a resort area near Lake Michigan Depreciation on the hotel is 5 72.296 per year, Karen

image text in transcribed

Karen Botosan operates a bed and breakfast hotel in a resort area near Lake Michigan Depreciation on the hotel is 5 72.296 per year, Karen employs a maintenance person at an annual salary of $ 54,000 and a cleaning person at an annual salary of $ 37.000. Real estate taxes are $ 23,000 per year. The rooms rent at an average price of $ 73,00 per person per night including breakfast Other costs are Isundry and cleaning service at a cost of $2288 per person per night and the cost of food, which is $18.00 per person per night (a) Your answer has been saved. See score details after the due date. Determine the quantity of rentals and the sales revenue Karen needs to break even using the contribution margin technique Break-even quantity of rentals 5084 Break even sales 31127 (b) if the current level of rentals is 7.300, by what percentage can rentals decrease before Karen has to worry about having a net loss? (Round percentages to decimal places s. 52) Margin of safety Karen is considering upgrading the breakfast service to attract more business and increase prices. This will cost an additional $ 16 for food costs per person per night. She feels she can increase the room rate to $107.00 per person per night. Determine the quantity of rentals and the sales revenue Karen needs to break even if the changes are made. (Round answers to 0 decimal places, eg. 5,275.) Break-even number of rentals Break-even sales $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Auditing

Authors: Knapp, Rittenberg

1st Edition

1133731244, 978-1133731245

More Books

Students also viewed these Accounting questions