Question
Margaret Botosan operates a bed and breakfast hotel in a resort area near Lake Michigan. Depreciation on the hotel is $70,224 per year. Margaret employs
Margaret Botosan operates a bed and breakfast hotel in a resort area near Lake Michigan. Depreciation on the hotel is $70,224 per year. Margaret employs a maintenance person at an annual salary of $50,000 and a cleaning person at an annual salary of $33,000. Real estate taxes are $19,000 per year. The rooms rent at an average price of $69.00 per person per night including breakfast. Other costs are laundry and cleaning service at a cost of $19.12 per person per night and the cost of food, which is $14.00 per person per night.
(a)
Determine the quantity of rentals and the sales revenue Margaret needs to break even using the contribution margin technique.
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