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| Exercise 18-9 |
The Green Acres Inn is trying to determine its break-even point. The inn has 50 rooms that it rents at $75a night. Operating costs are as follows.
| Salaries | $8,673 | per month | |
| Utilities | $1,859 | per month | |
| Depreciation | $1,239 | per month | |
| Maintenance | $619 | per month | |
| Maid service | $9 | per room | |
| Other costs | $36 | per room |
Determine the inn’s break-even point in (1) number of rented rooms per month and (2) dollars.
| (1) | Break-even point | rooms | |||
| (2) | Break-even point | $ |
| Exercise 18-11 |
Kare Kars provides shuttle service between four hotels near a medical center and an international airport. Kare Kars uses two 10-passenger vans to offer 12 round trips per day. A recent month’s activity in the form of a cost-volume-profit income statement is shown below.
| Fare revenues (1,400fares) | $35,000 | |||
| Variable costs | ||||
| Fuel | $4,200 | |||
| Tolls and parking | 2,100 | |||
| Maintenance | 700 | 7,000 | ||
| Contribution margin | 28,000 | |||
| Fixed costs | ||||
| Salaries | 14,110 | |||
| Depreciation | 1,328 | |||
| Insurance | 1,162 | 16,600 | ||
| Net income | $11,400 |
(a)Calculate the break-even point in (1) dollars and (2) number of fares.
| (1) | Break-even point | $ | |||
| (2) | Break-even point | fares |
(b)Without calculations, determine the contribution margin at the break-even point.
| Contribution margin at the break-even point | $ |
| LINK TO TEXT |
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