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The Richibouctou Inn is trying to determine its break-even point.
The inn has 70 rooms available that are rented at $40 a night. Operating costs are as follows:
Salaries $5,506 per month
Maintenance $400per month
Utilities $2,010per month
Housekeeping service $4per room
Depreciation $1,480per month
Other costs $18per room
Problem 1: Determine the inn's break-even point in the number of rented rooms per month and dollars.
Problem 2: If the inn plans on renting 29 rooms per day (assuming a 30-day month), what is the monthly margin of safety in dollars and the margin of safety ratio?
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