The bonita inn is trying to determine its break-even point.

E6-1 The Bonita Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at a night. Operating costs are as follows.

Salaries

$8,800

per month

 

Maintenance

$800

per month

Utilities

2,400

per month

 

Maid service

8

per room

Depreciation

1,500

per month

 

Other costs

37

per room

Instructions
(a)(1) Determine the inn’s break-even point in number of rented rooms per month.
(a)(2) Determine the inn’s break-even point in dollars.
(b)(1) If the inn plans on renting an average of           rooms per day           (assuming a -day month), what is the monthly margin of safety in dollars?
(b)(2) If the inn plans on renting an average of           rooms per day (assuming a 30-day month), what is the margin of safety ratio?

TUTORIAL PREVIEW
(a)(1) Determine the inn’s break-even point in number of rented rooms per month.

 

Contribution margin per room =

$60

      (

$8

+

$37

)

 
 

Contribution margin per room =

$15

 

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