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 | $30 per room |
Determine the inn's break-even point in the number of rented rooms per month.
Break-even Point:
Break-even analysis helps to determine the total units of the product or service the company will have to sell to recover the product and the selling cost.
BEP = Fixe cost/ (Selling price per unit - Variable Cost per Unit)
Answer and Explanation: 1
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View this answer| Particulars | Amount ($) | |
|---|---|---|
| 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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How to Calculate the Break-Even Point - Definition & Formula
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Chapter 5 / Lesson 28
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