Answered You can buy a ready-made answer or pick a professional tutor to order an original one.

QUESTION

Kelly Hayes operates a bed and breakfast hotel in a beach resort area of Noosa. Depreciation on the hotel is $60,000 per year. Kelly employs a maintenance person at an annual salary of $30,000 per yea

Kelly Hayes operates a bed and breakfast hotel in a beach resort area of Noosa. Depreciation on the hotel is $60,000 per year. Kelly employs a maintenance person at an annual salary of $30,000 per year and a cleaning person at an annual salary of $24,000 per year. Rates and taxes are $10,000 per year. The rooms rent at an average price of $50 per person per night including breakfast. Other costs are laundry service at $4.00 per person per night and the cost of food which is $6.00 per person per night.

Instructions:

  1. (a) Determine the number of rentals and the sales revenue Kelly needs to break even using the contribution margin technique.
  2. (b) If the current level of rentals is 4,000, by what percentage (Margin of Safety) can rentals decrease before Kelly has to worry about having a net loss? (2 marks)
  3. (c) Kelly is considering upgrading the breakfast service to attract more business and increase prices. This will cost an additional $5.00 for food costs per person per night. Kelly feels she can increase the room rate to $65 per person per night. Determine the number of rentals and the sales revenue Kelly needs to break even if the changes are made.
Show more
ProfTalent
ProfTalent
  • @
  • 2594 orders completed
ANSWER

Tutor has posted answer for $10.00. See answer's preview

$10.00

****** ***************************** - *********************** - ******************* *** *********************************** ************* ************ Laundry *** ******************* margin$40Break * ********** of *************** * *** = 3100In *************** * ************************* ** *********** ********* Sales4000-3100= 900CBreak **** (Number ** ************** rate$65Less:Laundry *** **** ************************* **************** **** (Number of ******** = *********** * 2480In *************** ********** ******

or Buy custom answer
LEARN MORE EFFECTIVELY AND GET BETTER GRADES!
Ask a Question