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mihalych1998 [28]
3 years ago
11

The Carla Vista Acres Inn is trying to determine its break-even point during its off-peak season. The Inn has 50 rooms that it r

ents at $40 a night. Operating coats are as follows (show work)
salaries $5,000 per month

Utilities $1,100 per month

Depreciation $1,200 per month

Maintenance $780 per month

Maid Service $7 per month

Other costs $13 per month


1. Determine the Inn’s break-even point in number of rented rooms per month
2. Determine the Inn’s break-even point in dollars.
Business
1 answer:
SashulF [63]3 years ago
8 0

<u>Solution and Explanation:</u>

 Breakeven point = Fixed cost divide by Contribution margin

Contribution margin = Sales minus Variable cost.

Fixed cost

Particular           Amount

Salaries                  $5000

Utilities                   $1100

Depreciation   $1200

Maintenance   $780

Total Fixed cost = $8,080.

Variable cost =Maid services plus Other cost = $7 plus $13 = $20

Contribution = $40 minus $20 = $20.

Breakeven point in number = $8080 divide 20 = 404 rented rooms per month.

Breakeven point in $ = Breakeven point rented rooms × rent cost.

=> 404 rooms multiply $40 = $16,160.

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Answer:

WACC = 0.16637 OR 16.637%

Explanation:

WACC or weighted average cost of capital is the cost of a firm's capital structure which can comprise of debt, preferred stock and common equity. The WACC for a firm with only debt and common equity can be calculated as follows,

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WACC = 38.6/1238.6  *  0.08  *  (1-0.33)  +  1200/1238.6  *  0.17

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