MANAGEMENT ACCOUNTING Mark attempt COST-VOLUME-PROFIT (CVP) ANALYSIS Teemu Selanne operates a bed & breakfast hotel in Banff, Alberta, Canada. His forecasts for next year follow: Create new question Annual rental costs Maintenance staff monthly salaries Cleaning staff monthly salaries Security cost per room rental Cost of food per room rental Average room rental revenue Monthly average no. of room rentals $40,000 $12,500 $22,000 $4 $8 $120 400 Don't worry about rounding your answers. REQUIRED: 1. 2. 3. 4. ANSWER ANSWER ANSWER Calculate the number of room rentals per year that Teemu needs to break even. Calculate the annual sales revenue required to break even. Calculate the annual number of room rentals required to earn a profit before tax of $50,000. Teemu is considering an upgrade of his business to attract more customers and to increase his profits. He plans to increase his food costs by $10 per room rental as he thinks this will allow him to increase his average room rental rate by $25. Calculate Teemu's new break-even number of room rentals. Teemu's plan to increase the room rental rate will require repair costs of $20,000. What is the annual break-even number of room rentals with this additional cost ? Calculate Teemu's annual margin of safety for Required 5. Show this value as the number of room rentals. 5. ANSWER 6. ANSWER Unprotected cells for your workings if desired Contribution Break even