As part of their application for a loan to buy Lakeside Farm, a property they hope to develop as a bed-and-breakfast operation, the prospective owners have projected: Monthly fixed cost (loan payment, taxes, insurance, maintenance) $6000 Variable cost per occupied room per night $ 20 Revenue per occupied room per night $ 75 Write the expression for total cost per month. Assume 30 days per month. Write the expression for total revenue per month. How many rooms they need to sell per night in order to break even? Suppose 5 rooms can be sold per night, how much they should charge per night in order to breakeven?
As part of their application for a loan to buy Lakeside Farm, a property they hope to develop as a bed-and-breakfast operation, the prospective owners have projected: Monthly fixed cost (loan payment, taxes, insurance, maintenance) $6000 Variable cost per occupied room per night $ 20 Revenue per occupied room per night $ 75 Write the expression for total cost per month. Assume 30 days per month. Write the expression for total revenue per month. How many rooms they need to sell per night in order to break even? Suppose 5 rooms can be sold per night, how much they should charge per night in order to breakeven?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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As part of their application for a loan to buy Lakeside Farm, a property they hope to develop as a bed-and-breakfast operation, the prospective owners have projected:
Monthly fixed cost (loan payment, taxes, insurance, maintenance) $6000
Variable cost per occupied room per night $ 20
Revenue per occupied room per night $ 75
-
Write the expression for total cost per month. Assume 30 days per month.
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Write the expression for total revenue per month.
-
How many rooms they need to sell per night in order to break even?
-
Suppose 5 rooms can be sold per night, how much they should charge per night in order to breakeven?
Expert Solution
Step 1
Breakeven is that point where revenue is equal to cost
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