# The bonita inn is trying to determine its break-even point.

E6-1 The Bonita Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at a night. Operating costs are as follows.

Salaries

\$8,800

per month

Maintenance

\$800

per month

Utilities

2,400

per month

Maid service

8

per room

Depreciation

1,500

per month

Other costs

37

per room

Instructions(a)(1) Determine the inn’s break-even point in number of rented rooms per month.(a)(2) Determine the inn’s break-even point in dollars.(b)(1) If the inn plans on renting an average of           rooms per day           (assuming a -day month), what is the monthly margin of safety in dollars?(b)(2) If the inn plans on renting an average of           rooms per day (assuming a 30-day month), what is the margin of safety ratio?
TUTORIAL PREVIEW(a)(1) Determine the inn’s break-even point in number of rented rooms per month.

Contribution margin per room =

\$60

–     (

\$8

\$37

)

Contribution margin per room =

\$15

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