The San Marcos Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $50 a night. Operating costs are as follows:
Costs Amount
Salaries $8,500 per month
Utilities 2,000 per month
Depreciation 1,000 per month
Maintenance 500 per month
Maid service 5 per room
Other costs 33 per room
(a) Determine the inn's break-even point in
1. Number of rented rooms per month and
2. Dollars
(b) If the inn plans on renting an average of 50 rooms per day (assuming a 30-day month), what is
1. The monthly margin of safety in dollars and
2. The margin of safety ratio