Determine the inns break-even point

Assignment Help Managerial Accounting

Reference no: EM13170018

Problem 1:

The Green Acres Inn is trying to determine its break-even point. The inn has 50 rooms that it rents at $75a night. Operating costs are as follows.

Salaries	$8,547	per month
Utilities	$1,832	per month
Depreciation	$1,221	per month
Maintenance	$610	per month
Maid service	$9	per room
Other costs	$36	per room

Determine the inn's break-even point in (1) number of rented rooms per month and (2) dollars.

(1)		Break-even point			rooms
(2)		Break-even point		$

Problem 2

Kare Kars provides shuttle service between four hotels near a medical center and an international airport. Kare Kars uses two 10-passenger vans to offer 12 round trips per day. A recent month's activity in the form of a cost-volume-profit income statement is shown below.

Fare revenues (1,400fares)		$35,000
Variable costs
Fuel	$6,300
Tolls and parking	3,150
Maintenance	1,050	10,500
Contribution margin		24,500
Fixed costs
Salaries	12,495
Depreciation	1,176
Insurance	1,029	14,700
Net income		$9,800

(a) Calculate the break-even point in (1) dollars and (2) number of fares.

(1)		Break-even point		$
(2)		Break-even point			fares

(b) Without calculations, determine the contribution margin at the break-even point.

Reference no: EM13170018

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