Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Sandra Botosan operates a bed and breakfast hotel in a resort area near Lake Michigan. Depreciation on the hotel is $76,272 per year. Sandra employs
Sandra Botosan operates a bed and breakfast hotel in a resort area near Lake Michigan. Depreciation on the hotel is $76,272 per year. Sandra employs a maintenance person at an annual salary of $57,000 and a cleaning person at an anual salary of $40,000. Real estate taxes are $26,000 per year. The rooms rent at an average price of $76.00 per person per night including breakfast. Other costs are laundry and cleaning service at a cost of $26.12 per person per night and the cost of food, which is $21.00 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 Sandra needs to break even using the contribution margin technique. Break-even quantity of rentals Break-even sales $ Attempts: 1 of 1 used (b) Your answer has been saved. See score details after the due date. If the current level of rentals is 8,900 , by what percentage can rentals decrease before Sandra has to worry about having a net loss? (Round percentages to 0 decimal places, e.g. 52\%.) Margin of safety % Attempts: 1 of 1 used (c) Sandra is considering upgrading the breakfast service to attract more business and increase prices. This will cost an additional $19 for food costs per person per night. She feels she can increase the room rate to $116.00 per person per night. Determine the quantity of rentals and the sales revenue Sandra needs to break even if the changes are made. (Round answers to 0 decimal places, e.g. 5,275.) Break-even number of rentals Break-even sales $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started