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 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
|Total fixed costs (A)||12,750|
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fromChapter 5 / Lesson 28
See 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.