The Soma Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $60 a night. Operating costs are as follows.
Salaries............................10,600 per month
Utilities..............................2,400 per month
Depreciation........................1,500 per month
Maintenance...........................800 per month
Maid service..............................8 per room
Other costs...............................34 per room
Instructions
(a) Determine the inn's break-even point in (1) number of rented rooms per month and (2) dollars.
(b) 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?