Question

In: Accounting

If a hotel sells room nights for $80 with a $20 variable cost per room and...

If a hotel sells room nights for $80 with a $20 variable cost per room and incurs $17,000 in fixed expenses monthly. What is the breakeven revenue?

$22,666.97

$22,666.87

$22,666.77

$22,666.67

Solutions

Expert Solution

Amswer: $22,666.67

.

.

Contribution Margin per room night = Selling price per room night – Variable cost per room night

                                                           = $80 - $20

                                                           = $60

Contribution Margin ratio = (Contribution Margin per room night / Selling price per room night) x 100

                                           = ($60 / $80) x 100

                                           = 75%

Break Even Point (In dollars) =Fixed cost / Contribution Margin per room night

                                                = $17,000 / 75%

                                                = $22,666.6666666….

                                                = $22,666.67    (rounded to 2 decimal places)

ekkarill92 answered 2 years ago
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