# The Palmer Acres Inn is trying to determine its break-even point during its off-peak season. The...

## Question:

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 $75 a night. Operating costs are as follows:

Salaries | $5,400 per month |

Utilities | $1,100 per month |

Depreciation | $1,100 per month |

Maintenance | $5,150 per month |

Maid service | $15 per room |

Other costs | $30 per room |

Determine the inn's break-even point in the number of rented rooms per month.

## Break-even Point:

Break-even analysis helps to determine the total units of the product or service the company will have to sell to recover the product and the selling cost.

BEP = Fixe cost/ (Selling price per unit - Variable Cost per Unit)

## Answer and Explanation: 1

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Particulars | Amount ($) | |
---|---|---|

Salaries | 5,400 | |

Add: | Utilities | 1,100 |

Add: | Depreciation | 1,100 |

Add: | Maintenance | 5,150 |

Total fixed costs (A) | 12,750 | |

Sales (B) | 75 | |

... |

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Chapter 5 / Lesson 28See how to calculate break-even point (in units and dollars). See the variables of the break-even point formula and examples. Understand the purpose of break-even analysis.

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