Jenny Noon operates a Bed and Breakfast Inn in a resort area in the Ozark Mountains. The rooms rent at an average price of $60.00 per person per night (including meals). Depreciation on the inn is $40,000 per year. Jenny employs a part-time maintenance person at an annual salary of $17,000 per year and a cleaning person at an annual salary of $19,000 per year. Real estate taxes are $5,000 per year. Other costs are laundry service at a cost of $2.50 per person per night and the cost of food which is $3.50 per person per night. (Assume all guests will use the laundry service and eat their evening meal). Jenny is considering upgrading the breakfast service to attract more business and increase prices. This will increase Jenny’s food costs by $6.00 per person per night. Jenny feels she can increase the room rate charged to guests to $79.50 per person per night. Determine the dollar amount AND the number of guest rentals Jenny needs to break-even if the changes are made
Jenny Noon operates a Bed and Breakfast Inn in a resort area in the Ozark Mountains. The rooms rent at an average price of $60.00 per person per night (including meals).
Jenny is considering upgrading the breakfast service to attract more business and increase prices. This will increase Jenny’s food costs by $6.00 per person per night. Jenny feels she can increase the room rate charged to guests to $79.50 per person per night. Determine the dollar amount AND the number of guest rentals Jenny needs to break-even if the changes are made.
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