Problem: The Lake Shore Inn is trying to determine its break-even point. The inn has 50 rooms that it rents at $60 a night. Operatings costs are as follows:
Salaries $7,200 per month
Utilities 1,500 per month
Depreciation 1,200 per month
Maintenance 300 per month
Maid Service 8 per room
Other costs 28 per room
Determine the inn's break-even point in (1) number of rooms per month and (2) dollars
Template for Exercise:
Directions: Calculate the following. Show your work.
Part 1.
Contribution margin per room
Contribution margin ratio
Fixed costs
Break-even point in rooms
Part 2.
Break-even point in dollars