The San Marcos Inn is trying to determine its break-even point.
The inn has 75 rooms that are rented at $50 a night. Operating
costs are as follows.
Salaries
..$8,500 per month
Utilities
.. 2,000 per month
Depreciation
.. 1,000 per month
Maintenance
.. 500 per month
Maid service
.. 5 per room
Other costs
33 per room
Instructions
(a) Determine the inns break-even point in
(1) Number of rented rooms per month
(2) Dollars.
(b) If the inn plans on renting an average of 50 rooms per
day (assuming a 30-day month), what is
(1) The monthly margin of safety in dollars
(2) The margin of safety ratio?
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