E6-1 The Bonita Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at a night. Operating costs are as follows.
| Salaries |
$8,800 |
per month |
|
Maintenance |
$800 |
per month |
| Utilities |
2,400 |
per month |
|
Maid service |
8 |
per room |
| Depreciation |
1,500 |
per month |
|
Other costs |
37 |
per room |
Instructions
(a) Determine the inn's break-even point in number of rented rooms per month.
(a) Determine the inn's break-even point in dollars.
(b) If the inn plans on renting an average of rooms per day (assuming a -day month), what is the monthly margin of safety in dollars?
(b) If the inn plans on renting an average of rooms per day (assuming a 30-day month), what is the margin of safety ratio?