edugen.willeyplus.comm Yahoo Mai 2 Test 2 Return to Blackboard Kimmel, Accountin
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Question
edugen.willeyplus.comm Yahoo Mai 2 Test 2 Return to Blackboard Kimmel, Accounting, 6e Helo l ent Exercise 19-1 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 Utilities Depreciation Maintenance Maid service Other costs 10,000 per month 2,100 per month 1,500 per month 800 per month 7 per room 31 per room Your answer is partialy correct. Try again. Determine the inn's break-even point in (1) number of rented rooms per month and (2) dolars. 1. Break-even point in rooms 2. Break-even point Your answer is partially correct. Try again. of 2ohn wiley &Sansic; reacy Poio 1 .2000-201&John; werkSos.s. All Rights Reserved, A Divison ofExplanation / Answer
Answer
Fixed Cost [per month]
Variable cost [per room]
Salaries
10000
Utilities
2100
Depreciation
1500
Maintenance
800
Maid Service
7
Other costs
31
Total
$14400
$38
Rent per room per night
$56
(-) Total variable cost per room
$38
Contribution margin
$18
Fixed Cost [total]
$14400
Contribution margin
$18
Break Even point in rooms [14400/18]
800 rooms
Rent per room
$56
Break Even point [800 x $56]
$44,800
Total room rented
1500
(-) Break Even point in room [calculated above]
800
Margin of Safety Room
700
Room Rent
$56 per room
Margin of Safety in $ [700 x $56]
$39200
Margin of Safety ratio [700/1500]
0.466666667 or 47%
Fixed Cost [per month]
Variable cost [per room]
Salaries
10000
Utilities
2100
Depreciation
1500
Maintenance
800
Maid Service
7
Other costs
31
Total
$14400
$38
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