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Bonita Inn

Price: $1.99

The Bonita 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  $8,800 per month 
Utilities  2,400 per month 
Depreciation  1,500 per month 
Maintenance  800 per month 
Maid service  8 per room 
Other costs  37 per room 

(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?
Compute break-even point and margin of safety.

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