The Inn charges a room rate of $180 per night. The variable costs per room are estimatedto be $60 per night. Fixed costs for a month are as follows:Property taxes $ 550Insurance 320Salaries 4,250Depreciation 880Total fixed costs $ 6,0001. Using the information above, calculate the number of rooms necessary to be rented each month in order for the Inn to break even.2. Calculate the contribution margin ratio of renting a room. (XX.X) 3. What is the Inn's breakeven point in monthly revenue?4. If the Inn wanted to earn a monthly net income of $6,600, how many rooms would it have to rent each month?5. If the Inn rents 80 rooms this month, what is its safety margin…in rooms?in revenue?as a percentage of revenue? (XX.X)6. The Inn is facing some cost increases. As it looks right now, in a few months variable costs will increase by $5 per room, property taxes will increase by 2%. Insurance will be obtained from a new carrier and will be reduced by $31 per month. Salary increases will be considered at a later time. Given these changes, how many rooms would the Inn have to rent each month in order to break even?
The Inn charges a room rate of $180 per night. The variable costs per room are estimated
to be $60 per night. Fixed costs for a month are as follows:
Property taxes $ 550
Insurance 320
Salaries 4,250
Depreciation 880
Total fixed costs $ 6,000
1. Using the information above, calculate the number of rooms necessary to be rented each month
in order for the Inn to break even.
2. Calculate the contribution margin ratio of renting a room. (XX.X)
3. What is the Inn's breakeven point in monthly revenue?
4. If the Inn wanted to earn a monthly net income of $6,600, how many rooms would it
have to rent each month?
5. If the Inn rents 80 rooms this month, what is its safety margin…
in rooms?
in revenue?
as a percentage of revenue? (XX.X)
6. The Inn is facing some cost increases. As it looks right now, in a few months variable costs will
increase by $5 per room, property taxes will increase by 2%. Insurance will be obtained from a
new carrier and will be reduced by $31 per month. Salary increases will be considered at a later
time. Given these changes, how many rooms would the Inn have to rent each month in order to
break even?
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