Question

The Ayayai Acres Inn is trying to determine its break-even point during its off-peak season. The inn has 50 rooms that it rents at $50 a night. Operating costs are as follows: Salaries Utilities Depreciation Maintenance Maid service Other costs $5,800 per month $1,000 per month $900 per month $300 per month $10 per room $20 per room Determine the inn's break-even point in number of rented rooms per month. Break-even point rooms e Textbook and Media Determine the inn's break-even point in dollars. Break-even point $

Answer 1

Break even point = Fixed cost/Contribution margin per unit

= (5800+1000+900+300)/(50-10-20)

= 400 rooms

​​​​​​Breakeven point = 400 rooms.* 50

= 20,000

Comment if you face any issues