1. The M & L Inn's summary income statement is in the Tab 1, please use the information to answer the following questions:

1. What is the breakeven point for the M & L Inn? (2 points)
2. If the fixed cost lease is changed to variable lease of 20% of total sales, what is the revised breakeven point for the M & L Inn? (5 points)

The M & L Inn's summary income statement is as following:
	Rooms	Food	Total
Revenue	$ 1,500,000	$ 500,000	$ 2,000,000
VC	$ 300,000	$ 400,000	$ 700,000
CM	$ 1,200,000	$ 100,000	$ 1,300,000
FC*			$ 1,000,000
Pretax Income			$ 300,000
Income Taxes			$ 75,000
Net income			$ 225,000
*Includes Lease Expense of $480,000