Suppose a Comfort Inn motel has annual fixed costs applicable to its rooms of $1.2 million for its 300- room motel, average daily room rents of $50, and average variable costs of $10 for each room rented. It operates 365 days per year. The break- even point in number of rooms rented is:
A) 30,000 rooms
B) 120,000 rooms
C) 24,000 rooms
D) None of these answers is correct.

Question

Quizplus · Accepted Answer

Break-even point in number of rooms rented = Fixed costs / (Average daily room rent - Average variable costs)= $1.2 million / ($50 - $10)= $1.2 million / $40= 30,000 rooms

Suppose a Comfort Inn Motel Has Annual Fixed Costs Applicable