Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

Linda Botosan operates a bed and breakfast hotel in a resort area near Lake Michigan. Depreciation on the hotel is $ 63,735 per year. Linda

image text in transcribed

Linda Botosan operates a bed and breakfast hotel in a resort area near Lake Michigan. Depreciation on the hotel is $ 63,735 per year. Linda employs a maintenance person at an annual salary of $ 44,000 and a cleaning person at an annual salary of $ 27,000. Real estate taxes are $ 13,000 per year. The rooms rent at an average price of $ 63.00 per person per night including breakfast. Other costs are laundry and cleaning service at a cost of $12.79 per person per night and the cost of food, which is $ 8.00 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 Linda needs to break even using the contribution margin technique. Break-even quantity of rentals 7035 Break-even sales $ 443205 Attempts: 1 of 1 used (b) If the current level of rentals is 4,500, by what percentage can rentals decrease before Linda has to worry about having a net loss? (Round percentages to 0 decimal places, e.g. 52%.) Margin of safety % Screenshot

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Advanced Financial Accounting

Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker

10th edition

978-0078025624

Students also viewed these Accounting questions