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
Hitman42 [59]
3 years ago
9

Jane Botosan operates a bed and breakfast hotel in a resort area near Lake Michigan. Depreciation on the hotel is $60,000 per ye

ar. Jane employs a maintenance person at an annual salary of $41,000 and a cleaning person at an annual salary of $24,000. Real estate taxes are $10,000 per year. The rooms rent at an average price of $60 per person per night including breakfast. Other costs are laundry and cleaning service at a cost of $10 per person per night and the cost of food which is $5 per person per night.
Determine the number of rentals and the sales revenue Jane needs to break even using the contribution margin technique.
Break-even number of rentals
Break-even sales $
If the current level of rentals is 4,000, by what percentage can rentals decrease before Jane has to worry about having a net loss?
Margin of safety %
Jane is considering upgrading the breakfast service to attract more business and increase prices. This will cost an additional $3 for food costs per person per night. Jane feels she can increase the room rate to $68 per person per night. Determine the number of rentals and the sales revenue Jane needs to break even if the changes are made.
Break-even number of rentals
Break-even sales
Business
1 answer:
Dimas [21]3 years ago
4 0

Answer:

Results are below.

Explanation:

F<u>irst, we determine the total fixed costs and unitary variable cost:</u>

Total fixed costs= 60,000 + 41,000 + 24,000 + 10,000

Total fixed costs= $135,000

Unitary variable cost= 10 + 5= $15

<u>To calculate the break-even point in units and dollars, we need to use the following formulas:</u>

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 135,000 / (60 - 15)

Break-even point in units= 3,000 rentals

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 135,000 / (45/60)

Break-even point (dollars)=$180,000

<u>Now, we can determine the margin of safety:</u>

Margin of safety ratio= (current sales level - break-even point)/current sales level

Margin of safety ratio= (4,000 - 3,000) / 4,000

Margin of safety ratio= 25%

<u>Sales can decrease by 25% before having a net loss.</u>

Increase in unitary variable costs= $3

Increase in selling price= $8

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 135,000 / (68 - 18)

Break-even point in units= 2,700 rentals

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 135,000 / (50/68)

Break-even point (dollars)=$183,600

You might be interested in
A long-term liability should be reported as a current liability in a classified balance sheet if the long-term debt: Is callable
Eddi Din [679]

Answer:

A long-term liability should be reported as a current liability in a classified balance sheet if the long-term debt: Is callable by the creditor - Will be refinanced with stock.

Option A is the correct answer.

Explanation:  

Generally, a short term liability is required to be paid by the company within a period of 1 year. Nevertheless, if the liability is callable the creditor, the company is not required to pay the liability within a year.

Thus, in this instance, a current liability can be detailed as a long term debt in the balance sheet.

6 0
3 years ago
3. During Michael Jordan's NBA career (
mojhsa [17]

Answer:

7324

Explanation:

We need to find the number of completed free throws out of total free throws

Since he completed 83.5% of them, you find 83.5% of 8772

83.5% can be rewritten as 0.835

8772 \times 0.835 = 7324.62

We don't round up because it isn't 1 complete free throw. 0.62 is not 1 complete free throw so round down

3 0
2 years ago
What tends to happen to the accuracy of our savings goals as our investment horizon becomes longer?
SIZIF [17.4K]

We are less able to accurately estimate the amount we will need tends to happen to the accuracy of our savings goals as our investment horizon becomes longer.

Secured Goals is part of an account that is structured to save only your money and save that as well, all the difference is this is a great dividend saving account to protect against accidental spending. When you open a protected savings fund, a savings goal is automatically created or credit installments are created only at the end of each month.

Setting goals helps investment horizon you break down the saving process to make it easier and more convenient. Setting goals saves time.

Learn more about investment horizon at

brainly.com/question/24082337

#SPJ4

6 0
1 year ago
Justify the effectiveness of the national credit act ,2005 on businesses
forsale [732]

Answer:

The Act was introduced to: promote a fair and non-discriminatory marketplace for access to consumer credit

Explanation:

The National Credit Act was enacted on the premise that consumers need to be protected from this practice. The Act thus exerts pressure on the credit lenders to assess the consumer's ability to repay, disclose the cost of credit, as well as setting limit on interest that can be charged.

5 0
3 years ago
AIDA, the indirect strategy for persuasive messages, seeks to gain the attention, interest, ________, and action of the audience
alexgriva [62]

Answer: Desire

Explanation: AIDA model is widely used in marketing and advertising to describe the steps or stages that occur from the time when a consumer first becomes aware of a product or brand through to when the consumer trials a product or makes a purchase decision

AIDA is an acronym for Attention, Interest, Desire and Action. It is a model that assist to explain how an advertisement or marketing communications message engages and involves consumers in brand choice

It is one of the long standing model used in advertising and it is also known as hierarchy of effects model.

5 0
3 years ago
Other questions:
  • Which analytical tool determines the relative attractiveness of various strategies based on the extent to which key external and
    9·1 answer
  • Since PepsiCo is a U.S. company doing business in Russia, it is likely that the company's discrimination policies for Russian fa
    14·1 answer
  • Yzer Inc. asked for volunteers from its employees to help with yard work on its premises prior to a grand reopening. Barton Rodr
    10·1 answer
  • If you cause a car accident which type of insurance will require you to pay the least out of pocket
    14·2 answers
  • The Ascent, a mountain bicycle manufacturer, has been in the bicycle industry for a year now. The CEO wishes to better the compa
    9·1 answer
  • Company ABC has liabilities of 20,000, 50,000 and 70,000 due at the end of years 1, 2 and 3 respectively. The company would like
    11·1 answer
  • Frank has saved $40.00 for concert tickets, but decides to buy a new pair of jeans instead. In this scenario, what do the concer
    15·1 answer
  • What happens in the foreign exchange market when a surplus of dollars​ exists? When there is a surplus of dollars in the foreign
    7·1 answer
  • What is Seth Godin’s overall message to companies?
    13·1 answer
  • If the economy is experiencing less than full-employment, the keynesian model recommends that the government.
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!