kong operates a boutique hotel in a resort area near Chenang, Langkawi. Depreciation on the hotel is 60,000 per year. kong employs a maintenance person at an annual salary of 41,000 and a cleaning person at an annual salary of 24,000. Real estate taxes are 10,000 per year. The rooms rent at an average price of 60 per person per night. Other costs are laundry and cleaning service at a cost of 10 per person per night and the cost of breakfast which is 5 per person per night. Required: (a) Indicate the number of rentals and the sales revenue kong needs to break even using the contribution margin technique. (b) If the current level of rentals is 4,000, by what percentage can rentals decrease before kong has to worry about having a net loss? (c) kong is considering upgrading the breakfast service to attract more business and increase prices. This will cost an additional 3 food costs per person per night. kongfeels she can increase the room rate to 68 per person per night. Indicate the number of rentals and the sales revenue kong needs to break even if the changes are

kong operates a boutique hotel in a resort area near Chenang, Langkawi. Depreciation on the hotel is 60,000 per year. kong employs a maintenance person at an annual salary of 41,000 and a cleaning person at an annual salary of 24,000. Real estate taxes are 10,000 per year. The rooms rent at an average price of 60 per person per night. Other costs are laundry and cleaning service at a cost of 10 per person per night and the cost of breakfast which is 5 per person per night. Required: (a) Indicate the number of rentals and the sales revenue kong needs to break even using the contribution margin technique. (b) If the current level of rentals is 4,000, by what percentage can rentals decrease before kong has to worry about having a net loss? (c) kong is considering upgrading the breakfast service to attract more business and increase prices. This will cost an additional 3 food costs per person per night. kongfeels she can increase the room rate to 68 per person per night. Indicate the number of rentals and the sales revenue kong needs to break even if the changes are

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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