Do Homework: Ch6 (Ch7) Score: 0 of 1 pt Problem 7.7 2 of 2 te) V MN Score: 25%,

Question

Do Homework: Ch6 (Ch7) Score: 0 of 1 pt Problem 7.7 2 of 2 te) V MN Score: 25%, 0.5 of 2 p for his motel to DUMy Mad Servie. Timrets an average of 50 mmsfor each of365 rigts 065 " 50 equals the total rooms rented for the yoar). Tim's cost to name. Tim's annual fixed cost for space, equipment, and supplies is $85,000 diean a room is $12.50 The Ouly's Maid Service custo is $1900 per room plus a fxed cost of $26,000 for sundry Rtems such as unferms with the mote's Based on the given information related to costs for each of the options, the crossover soint for Tim-111room nights (round your nesponse to the neareet whole number) pans 2 ing

Explanation / Answer

Solution:

Tim's cost to clean a room = $12.50 and fixed cost of $65,000

Quote of Duffy's maid service = $19 per room and fixed cost of $26,000

The crossover point is the point in room nights at which total cost under both options will be same.

Cross over point = (Tim's fixed cost - Dufff's fixed cost) / (Duffy cleaning cost per room - Tim cleaning cost per room)

= ($65,000 - $26,000) / ($19 - $12.50) = 6000 room nights

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