The San Marcos Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $50 a night. Operating costs are as follows:
|
Costs |
Amount |
|
Salaries |
$8,500 per month |
|
Utilities |
2,000 per month |
|
Depreciation |
1,000 per month |
|
Maintenance |
500 per month |
|
Maid service |
5 per room |
|
Other costs |
33 per room |
Instructions:
(a) Determine the inn’s break-even point in
1. Number of rented rooms per month and
2. Dollars
(b) If the inn plans on renting an average of 50 rooms per day (assuming a 30-day month), what is
1. The monthly margin of safety in dollars and
2. The margin of safety ratio