Kimmel, Accounting, 6e Help I Sy CALCULATOR PRINTE to determine its break-even p

Question

Kimmel, Accounting, 6e Help I Sy CALCULATOR PRINTE to determine its break-even point. The inn has 75 rooms that are rented at $56 a night. Operating costs are as follows Salaries Utilities Depreciation Maintenance Maid service Other costs $8,500 per month 2,700 per month 1,500 per month 800 per month 7 per room 31 per room (a) (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? (Round ratio to O decímal places, e.g. 10.) 1. Margin of safety 2. Margin of safety ratio LINK TO TEXT Attempts: 0 of 5 used SAVE FOR LATER SUBMIT ANSWER

Explanation / Answer

Margin of safety is the differenec between Actual sales and break even sales.

Per Unit Total Particulars Total rooms rented (50 rooms*30 days) 1,500 Sales per unit 56 84,000 Less: Variable costs Maid service 7 10,500 Other Costs 31 46,500 Total variable costs 57,000 Contribution Margin (Sales- variable cost) 18 27,000 Contribution Margin ratio (Contribution Margin/ sales) 32.14% 32.14% Fixed Costs (8,500+2,700+1,500+800) 13,500 Break even point (Fixed Cost/Cont Margin ratio) 42,000 Margin of safety (Total sales minus break even sales) 42,000 Margin of safety percentage (MOS/ Actual sales) 50%

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