1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Mazyrski [523]
3 years ago
8

The Soma Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $60 a night. Operating costs a

re as follows:
Salaries $9,700 per month
Utilities 2,700 per month
Depredation 1,300 per month
Maintenance 700 per month
Maid service 8 per room
Other costs 34 per room

Required:
a. Determine the inn's break-even point in (1) number of rented rooms per month and (2) dollars.
b. If the Inn plans to renting an average of 50 rooms per day (assuming a 30-day month), what is (1) the monthly margin of safety dollars and (2) the margin of safety ratio?
Business
1 answer:
Juli2301 [7.4K]3 years ago
8 0

Answer:

The Soma Inn

a. Determination of the inn's break-even point:

1. number of rented rooms per month:

= Fixed Costs/Contribution per room

= $14,400/$18

= 800 rooms

2. dollars:

= Fixed Costs/Contribution margin ratio per room

= $14,400/0.3

= $48,000

2. Renting average of 50 rooms per day,

a) Monthly margin of safety in dollars

Current Sales = 50 rooms x $60 x 30 days = $90,000

Break-even Sales = $48,000

Margin of safety = Current Sales minus Break-even Sales

= $42,000 ($90,000 - $48,000)

b) Margin of safety ratio:

= Margin of safety/Current Sales x 100

= $42,000/$90,000 x 100

= 46.67%

Explanation:

a) Data and Calculations:

Fixed costs:

Salaries       $9,700 per month

Utilities          2,700 per month

Depreciation 1,300 per month

Maintenance   700 per month

Total         $14,400 per month

Variable costs:

Maid service  8 per room

Other costs 34 per room

Total          $42 per room ($3,150 = $41 x 75 rooms)

Rent          $60 per room ($4,500 = $60 x 75 rooms)

Contribution per room = $18 ($60 - $42)

Contribution per night = $1,350 (75 x $18)

Contribution margin ratio per room = Contribution per room margin/Rent per room x 100

= $18/$60 x 100

=  0.3 or 30%

The Soma Inn's contribution margin per room is equal to the rent per room minus the variable cost per room.  Similarly, the contribution margin ratio per room is the contribution margin per room divided by the rent per room, and then multiplied by 100.

The Soma Inn's margin of safety is the difference between the rent per month and the break-even sales.  The Margin of safety ratio for the Inn is the ratio of current sales minus the breakeven sales, and then divided by current sales, multiplied by 100.

c) Once the purchases of merchandise have been computed, to compute the cost of goods sold becomes easier.  The cost of goods sold for Ahmed Company is the difference between the cost of goods available for sale and the ending inventories of merchandise.

You might be interested in
Which form of currency is not backed by gold today? The form of currency no longer backed by gold is called money
Amiraneli [1.4K]
<span>
The form of currency that is no longer backed by gold is called money. The currency is not backed by gold because in 1971 people have became able to utilize </span><span>banknotes</span><span> as the only form of money. So, the money had no currency with any gold or silver backing and that is the reason why it is not backed.
</span>
3 0
3 years ago
Which of the following is a benefit to corporate executives when a process is outsourced?
love history [14]

Answer:

<h2>In this case,the correct answer would be option b) given in the answer choices or More time to explore new revenue generation activities.</h2>

Explanation:

  • From an economic or business perspective, outsourcing of operational activities or conducts refer to assigning the business functions, activities, projects, assignments etc. to any third party or external agency with a view to enhance work productivity and minimize overall average operational costs or expenses.
  • The third party or the external entities involved in the outsourcing activities are typically not part of the parent or main company or are not commercially affiliated with the parent or main company.
  • One of the advantages of outsourcing to the company executives is to be able to assign some of the major and time consuming business activities to outsourced companies or entities and focus more on other mediums or sources of revenue generation for business. It might include introduction of new product or service lines, restructuring of the internal organizational settings or venturing new markets to capture higher consumer or client base. Hence, higher work or labor division through outsourcing activities can provide more time and opportunity for executives to focus more on other revenue generating endeavors.
5 0
3 years ago
Doug is filing singly. his net taxable income is $80,575. every week, $304 is withheld from his earnings for income tax. based o
mariarad [96]

Basing it on the information given, he will owe an additional $731.

<span>Since your taxable income has been identified, you just look up your income, find the column with your filing status, and then find the amount of tax you owe.</span>

6 0
3 years ago
Read 2 more answers
Consider the following cash flows: Year Cash Flow 2 $ 22,200 3 40,200 5 58,200 Assume an interest rate of 9 percent per year. a.
miss Akunina [59]

Answer:

Total FV= $134,711.26

Explanation:

Giving the following information:

Cash Flow:

Cf2= $22,200

Cf3= $40,200

Cf5= $58,200

Interest rate= 9 percent per year.

To calculate the future value, we need to use the following formula on each cash flow:

FV= PV*(1+i)^n

Cf2= 22,200*(1.09^3)= 28,749.64

Cf3= 40,200*(1.09^2)= 47,761.62

Cf5= 58,200

Total FV= $134,711.26

8 0
3 years ago
What is not typical of traditional costing systems?
charle [14.2K]

Answer: The options are given below:

A. Use of a single predetermined overhead rate.

B. Use of direct labor hours or direct labor cost to assign overhead.

C. Assumption of correlation between direct labor and incurrence of overhead cost.

D. Use of multiple cost drivers to allocate overhead.

The correct option is D.

Explanation: The traditional costing system refers to the allocation of factory overhead to products, and this is based on the total amount of production resources that have been consumed.

When using the traditional costing system, the overhead is usually applied based on either the total number of direct labor hours consumed or the total number of machine hours used.

The traditional costing systems treat overhead costs as a single pool of indirect costs. Traditional costing is optimal when indirect costs are low when in comparison with direct costs.

7 0
3 years ago
Other questions:
  • You want a new cell phone. Which of these sources would be the most dependable?
    12·2 answers
  • A copy machine acquired with a cost of $1,410 has an estimated useful life of 4 years. It is also expected to have a useful oper
    8·1 answer
  • A manager states that "HRD must become more strategic." What does this statement mean, and what can HRD professionals do to prac
    14·1 answer
  • A tax that can be passed onto someone else is known as a/an _______ tax.
    7·1 answer
  • The marginal productivity theory of resource demand suggests that those resources whose productivity levels are high will end up
    5·1 answer
  • Sal is very clear in defining for his subordinates the incentives available to them for different levels of performance. He make
    8·1 answer
  • To reduce your chances of identify theft you should
    5·1 answer
  • Say the following 2 events occur at the same time: 1) an increase in the price of milk, an input in the production of cheese; 2)
    9·1 answer
  • What isスポーツマーケティングブランとは?
    8·2 answers
  • Which form of media advertising has seen the sharpest decline in the United States over the last 15 years
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!