Sue Locke operates a bed and breakfast hotel with 20 units in a resort area of northern Michigan. Fixed overhead is $160,000 per year. The rooms rent for an average of $70 per night (including a free breakfast which costs Sue $4 per rented room per night). Other costs per rental are laundry and cleaning at $10 per night.

Show your work in detail!

Determine the number of room rentals per year so Sue can break even.

If the current rentals are 3000 per year, prepare a contribution income statement.

If Sue raises the rental to $75 per night, what is the breakeven point in units?