Answer:
Break-even point in units= 402 rooms a month
Explanation:
Giving the following information:
The inn has 50 rooms that it rents at $100 a night. Operating costs are as follows:
Salaries $7,500 per month
Utilities $1,500 per month
Depreciation $1,300 per month
Maintenance $1,760 per month
Maid service $24 per room
Other costs $46 per room
<u>First, we need to calculate the total fixed costs and the unitary variable cost.</u>
Total fixed costs= salaries + utilities + depreciation + maintenance
Total fixed costs= $12,060
Unitary variable cost= 24 + 46= $70
<u>To calculate the break-even point in units, we need to use the following formula:</u>
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 12,060/ (100 - 70)
Break-even point in units= 402 rooms a month
