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Question D1 a Caring Love is a registered non-profit organization and manages a nursing home concerned with the welfare of elderly and disable people. An
Question D1 a Caring Love is a registered non-profit organization and manages a nursing home concerned with the welfare of elderly and disable people. An in-house reflexology center has recently been opened and permanent staff engaged. Estimates have been prepared as follows: Fixed overheads: RM Salary and wages 24,800 per annum Rent 13,200 per annum Insurance 2,000 per annum Variable overheads: Massage oils Heating costs Soap bars 14 per resident per week 11 per resident per week 10 per resident per week (ii) The center can accommodate no more than 50 residents and it is proposed to charge each resident RM60 per week. Required: a) Assuming the center is fully occupied each week (i) How many weeks must the center be opened each year to break-even? (4 marks) If the center were to open for 40 weeks in the year, what price would have to be charged to each resident to break-even? (5 marks) b) If the average occupancy were only 32 residents per week at RM60 each (i) How many weeks must the center to open to break-even? (4 marks) What profit/loss would be incurred if the center opened for 40 weeks (4 marks) c) Identify 2 limitations that break-even analysis may have in the above situation
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