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What is the monthly breakeven level of sales at german inn

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Reference no: EM132594660

The German Inn (a rooms-only property) cost its owners $3,000,000 of which they borrowed $1,500,000. The GM estimates the following cost:

Variable costs per room sold:       20 percent of ADR

Annual fixed costs:

Salaries                  $200,000

Insurance                  20,000

Depreciation            100,000

Interest                 150,000

Other                     80,000

In addition, the Inn's pretax income will be taxed at an average tax rate of 25 percent.

Required:

Question 1: What is the monthly breakeven level of sales at the German Inn?

Question 2: What amount of annual sales are required if the owners are to earn 20 percent of their investment in this property?

Reference no: EM132594660

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