Question
1. Margin of Safety
2. Margin of Safety ratio
The Soma Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $52 a night Operating costs are as follows Salaries Utilities Depreciation Maintenance Maid service Other costs $8,650 per month 2.500 per month 1,500 per month 850 per month 6 per room 28 per room l Your answer is correct. Determine the inn's break-even point in (1) number of rented rooms per month and (2) dollars Break-even pointin rooms 750 2 Breakieven pount 39,000 If the inn plans on renting an average of 50 rooms per day (assuming a 30-day month), what is (1) the monthiy margin of safety in dollars and (2) the margin of safety ratio? (Round ratin to.o dedimal nlacese9..25 Maroin of sofetys 2 Hargn of safety ratio le
Explanation / Answer
1 Rented rooms per month=30*50=1500 Margin of safety=52*(1500-750)= $39000 2 Margin of safety ratio=750/1500=50%
