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What is the margin of safety ratio

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Reference no: EM131015632

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) Determine the inn's break-even point in number of rented rooms per month.

(a) Determine the inn's break-even point in dollars.

(b) 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) If the inn plans on renting an average of           rooms per day (assuming a 30-day month), what is the margin of safety ratio?

Reference no: EM131015632

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