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Problem #4 Taylor Slow operates a 30 room bed-and-breakfast in a resort area of Gratiot County. Maintenance and cleaning personnel are fixed at $100,000 per
Problem #4 Taylor Slow operates a 30 room bed-and-breakfast in a resort area of Gratiot County. Maintenance and cleaning personnel are fixed at $100,000 per year. Utilities are $50,000 per year, insurance is $30,000 per year and real estate taxes are $24,000 per year. The rooms rent at $40 per night which includes breakfast. Variable costs are $12 per room per night for cleaning and laundry and $6 per room per night for breakfast. SHOW ALL CALCULATIONS 1) Determine the 1) number of rooms rented and 2) sales dollars for Taylor's annual break-even point 2) Rooms rented last year were 9600, with the above cost structure. Prepare a CVP financial in good form. 3) Taylor wants to add a lunch service costing $6 per room per rental and also a $12,000 per year advertising contract. She believes she can rent 10,400 rooms per year. Good idea? Prepare contribution income statement
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