The San Marcos Inn is trying to determine its break-even point. The inn has 75
rooms that are rented at $50 a night. Operating costs are as follows.
Salaries $8,500 per month
Utilities 2,000 per month
Depreciation 1,000 per month
Maintenance 500 per month
Maid service 5 per room
Other costs 33 per room
(a) Determine the inn’s break-even point in (1) number of rented rooms per month and
(b) If the inn plans on renting an average of 50 rooms per day (assuming a 30-day month),
what is (1) the monthly margin of safety in dollars and (2) the margin of safety ratio?
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