G&A Inn is trying to determine its break-even point. The inn has 500 rooms that it rents at $66...
Question:
G&A Inn is trying to determine its break-even point.
The inn has 500 rooms that it rents at $66 per night.
Operating costs are as follows:
| Salaries | $5,815 | per month |
| Utilities | $1,114 | per month |
| Depreciation | $934 | per month |
| Maintenance | $81 | per month |
| Maid service | $14 | per room |
| Other costs | $20 | per room |
What is the break-even point in number of rented rooms per month?
Contribution Margin:
Contribution Margin represents the total selling price less the total variable costs incurred in a product. It is the ability of the firm to cover its variable costs, while the remaining covers the fixed and the profit earned by the company.
Answer and Explanation: 1
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View this answerFirst, let us compute the total fixed cost
| Particulars | Amount |
| Salaries | $5,815 |
| Utilities | $1,114 |
| Depreciation | $934 |
| Maintenance | $81 |
| Total Fixed Cost | $7,9... |
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