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Problem 1:

The Green Acres Inn is trying to determine its break-even point. The inn has 50 rooms that it rents at $75a night. Operating costs are as follows.

Salaries
$8,547 per month
Utilities
$1,832 per month
Depreciation
$1,221 per month
Maintenance
$610 per month
Maid service
$9 per room
Other costs
$36 per room

Determine the inn's break-even point in (1) number of rented rooms per month and (2) dollars.

(1)
Break-even point
rooms
(2)
Break-even point
$

Problem 2

Kare Kars provides shuttle service between four hotels near a medical center and an international airport. Kare Kars uses two 10-passenger vans to offer 12 round trips per day. A recent month's activity in the form of a cost-volume-profit income statement is shown below.

Fare revenues (1,400fares)


$35,000
Variable costs



Fuel
$6,300

Tolls and parking
3,150

Maintenance
1,050
10,500
Contribution margin


24,500
Fixed costs



Salaries
12,495

Depreciation
1,176

Insurance
1,029
14,700
Net income


$9,800

(a) Calculate the break-even point in (1) dollars and (2) number of fares.

(1)
Break-even point
$
(2)
Break-even point
fares

(b) Without calculations, determine the contribution margin at the break-even point.

Managerial Accounting, Accounting

  • Category:- Managerial Accounting
  • Reference No.:- M9746351

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