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The Soma Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $56 a night. Operating costs are
The Soma Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $56 a night. Operating costs are as follows.
Salaries | $10,000 | per month | |
Utilities | 2,100 | per month | |
Depreciation | 1,500 | per month | |
Maintenance | 800 | per month | |
Maid service | 7 | per room | |
Other costs | 31 | per room |
Determine the inns break-even point in (1) number of rented rooms per month and (2) dollars.
1. | Break-even point in rooms |
| ||
2. | Break-even point | $ |
If the inn plans on renting an average of 50 rooms per day (assuming a 30-day month), what is (1) the monthly margin of safety in dollars and (2) the margin of safety ratio? (Round ratio to 0 decimal places, e.g. 10.)
1. | Margin of safety | $ | |||
2. | Margin of safety ratio | % |
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