Question

In: Accounting

BREAKEVEN ANALYSIS 6. You own a 10 bedroom Bed and Breakfast With the following, $ 12,000...

BREAKEVEN ANALYSIS 6. You own a 10 bedroom Bed and Breakfast With the following, $ 12,000 per month mortgage payment $ 4,000 per month for the gardener and housekeeper $ 9.00 per room for soap, towels etc. $ 20.00 per room desired Net Profit Assume a 30 day month

SOLVE FOR THE FOLLOWING: a. The selling price per room per night AND the monthly breakeven point. b. The monthly breakeven point if you raise the selling price calculated in A above by $12.00. c. The monthly breakeven point if you lower the selling price calculated in A above by $3.00. d. Which of the 3 prices would you charge? What factors should you consider? e. What would your selling price and breakeven point be if you want to pay yourself $50,000 per year?

Solutions

Expert Solution

Solution:

1. Computation of Selling Price per room per night & Monthly Breakeven point

2. Computation of Monthly Breakeven Point when Selling Price in solution 1. is increased by $ 12

3. Computation of Monthly Breakeven Point when Selling Price in solution 1. is decreased by $ 3

4. Price Selection

Here, in this solution when we decide Selling price equal to $ 82.33, $ 94.33 and $ 79.33 then we have profit of $ 20 of $ 6,000, $ 32 of $ 9,600 and $ 17 of $ 5,100 in each cases respectively. Here, profit in Option II is highest hence we would select Option II of Selling Price equals to $ 94.33 per room per night.

Working Notes:

Computation of Profit when Selling Price is equal to $ 82.33 per room per night

Computation of Profit when Selling Price is equal to $ 94.33 per room per night

Computation of Profit when Selling Price is equal to $ 79.33 per room per night

5. Computation of Selling Price per room per night & Breakeven point when payment to self of $ 50,000 p.a.


Related Solutions

'Break even analysis You own a 10 bedroom hotel With the following prices: $ 12,000 per...
'Break even analysis You own a 10 bedroom hotel With the following prices: $ 12,000 per month mortgage payment    $ 4,000 per month for the gardener and housekeeper    $   9.00 per room for soap, towels etc.    $ 20.00 per room desired Net Profit Assume a 30 day month SOLVE FOR THE FOLLOWING: 1.   The selling price per room per night AND the monthly breakeven point. 2.   The monthly breakeven point if you raise the selling price calculated...
At Bradford Bed and Breakfast, the manager is looking to expand the facility. The following facts...
At Bradford Bed and Breakfast, the manager is looking to expand the facility. The following facts are known: Cost of the expansion $2,200,000 The Manager is paid $99,000 per year. Compensation will not change due to the expansion Property taxes will increase by $33,000 annually The expansion will add 10 rooms and it is expected all 10 will be occupied by paying guests The addition of the 10 guests each day is expected to add $800,000 of revenue annually A...
1) At Bradford Bed and Breakfast, the manager is looking to expand the facility. The following...
1) At Bradford Bed and Breakfast, the manager is looking to expand the facility. The following facts are known: Cost of the expansion $2,200,000 The Manager is paid $99,000 per year. Compensation will not change due to the expansion Property taxes will increase by $33,000 annually The expansion will add 10 rooms and it is expected all 10 will be occupied by paying guests The addition of the 10 guests each day is expected to add $800,000 of revenue annually...
How and when do you use the following tools: Sensitivity Analysis Breakeven Analysis Conjoint Analysis
How and when do you use the following tools: Sensitivity Analysis Breakeven Analysis Conjoint Analysis
conduct a breakeven analysis for the following project : A Invesment (OR) 888340.95 to be sold...
conduct a breakeven analysis for the following project : A Invesment (OR) 888340.95 to be sold unit /year 32000 variable cost OR/unit   1.596 selling price OR/unit 25 Annual expenses/year 499517 MV (OR) 200000 useful life 10
Using the Breakeven formula, compute the breakeven quantity for the following business example: You are a...
Using the Breakeven formula, compute the breakeven quantity for the following business example: You are a small burrito stand at a nightly music event at the city part in the summers (3 months in the summer). You sell your burrito for $1.75. Meat costs $0.30/burrito, beans cost $0.10/burrito, cheese costs $0.05, a tortilla costs $0.08 and the toppings (salsa, onions, etc.) costs $0.05 a burrito. Taxes are $300/season (season is 3 months long), insurance is $120/month, location rent is $500/month,...
Problem 3-9 Market Value Ratios (LG3-5) You are considering an investment in Roxie's Bed & Breakfast...
Problem 3-9 Market Value Ratios (LG3-5) You are considering an investment in Roxie's Bed & Breakfast Corp. During the last year, the firm's income statement listed an addition to retained earnings of $9.00 million and common stock dividends of $2.90 million. Roxie's year-end balance sheet shows common stockholders' equity of $42.7 million with 17 million shares of common stock outstanding. The common stock's market price per share was $9.50. What is Roxie's Bed & Breakfast's book value per share? (Round...
a. Analyze the following Graph and the breakeven point and discuss how this analysis is used...
a. Analyze the following Graph and the breakeven point and discuss how this analysis is used for decision making? b- If fixed costs are $400,000, selling price per unit is $150, and variable cost per unit is $100, how many units must the company sell in order to earn a profit of $ 100,000?
Cost-volume-profit analysis can be considered a more complex form of breakeven analysis. Which of the following...
Cost-volume-profit analysis can be considered a more complex form of breakeven analysis. Which of the following is an example of this? Question 18 options: Sara realizes she needs to sell 50 cakes a month to cover all of her variable and fixed costs Sara looks at raising the prices of her cakes to see how much more revenue will be generated Sara decides to remove carrot cakes from her menu because they do not sell as well the others Sara...
Consider the following information as part of a breakeven analysis: Cost of Production: Number of Units...
Consider the following information as part of a breakeven analysis: Cost of Production: Number of Units Cost ($) 0 o 700 4,900 Cost of Buying Number of Units Cost ($) 0 1,500 700 3,600 What would be the equation for the production cost? What would be the equation for the buying cost? What is the breakeven # Unis? What is the breakeven amout? If you were only interested in 400 units, which option should be selected? If you were only...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT