Question
In: Accounting
Jane Botosan operates a bed and breakfast hotel in a resort area near Lake Michigan. Depreciation...
Jane Botosan operates a bed and breakfast hotel in a resort area
near Lake Michigan. Depreciation on the hotel is $60,000 per year.
Jane 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
including breakfast. Other costs are laundry and cleaning service
at a cost of $10 per person per night and the cost of food which is
$5 per person per night.
Instructions:
1. Determine the number of rentals and the sales revenue Jane needs to break even using the contribution margin technique.
2. If the current level of rentals is 4,000, by what percentage can rentals decrease before Jane has to worry about having a net loss?
3. Jane is considering upgrading the breakfast service to
attract more business and increase prices. This will cost an
additional $3 for food costs per person per night. Jane feels
she
can increase the room rate to $68 per person per night. Determine
the number of rentals and the sales revenue Jane needs to break
even if the changes are made.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Jane Botosan operates a bed and breakfast hotel in a resort area near Lake Michigan. Depreciation...
Jane Botosan operates a bed and breakfast hotel in a resort area
near Lake Michigan. Depreciation on the hotel is $60,000 per year.
Jane employs a maintenance person at an annual salary of $32,000
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 including breakfast. Other costs are
laundry and cleaning service at a cost of $10 per person...
Jane Botosan operates a bed and breakfast hotel in a resort area near Lake Michigan. Depreciation...
Jane Botosan operates a bed and breakfast hotel in a resort area
near Lake Michigan. Depreciation on the hotel is $60,000 per year.
Jane 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 $10,700 per year. The rooms rent at an average price of
$128 per person per night including breakfast. Other costs are
laundry and cleaning service at a cost of $10.7 per person...
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