The Palmer Acres Inn is trying to determine its break-even point during its off-peak season. The...
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The Palmer Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at $60 a night.
Operating costs are as follows.
| Salaries | $5,900 per month |
|---|---|
| Utilities | $1,100 per month |
| Depriciation | $1,000 per month |
| Maintenance | $100 per month |
| Maid service | $14 per room |
| Other costs | $28 per room |
Determine the inn's break-even point in (a) number of rented rooms per month and (b) dollars.
Break-Even Point
Break-Even Point is the amount which could be expressed either in number of units or in sales value, wherein net operating income will be equal to zero or contribution margin will be equal to the total fixed cost.
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View this answerThe inn's break-even point in (a) number of rented rooms per month and (b) dollars are as follows:
(a) break-even point in number of rented rooms per...
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How to Calculate the Break-Even Point - Definition & Formula
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