Calculation of break-even point

Reference no: EM1347765

Susan Meyer, owner/manager of Meyer's Motor Court in Key West, is considering outsourcing the daily room cleanup for her motel to Duffy's Maid Service. Susan rents an averate of 50 rooms for each of the 365 nights (365*50 equals the total rooms rented for the year). Susan's cost to clean a room is $12.50. The Duffy's Maid Service quote is $19 per room plus a fixed cost of $25,000 for sundry items such as uniforms with the motel's name. Susan's annual fixed cost for space equipment, and supplies is $60,000.

1) Based on the given information related to costs for each of the options, the break-even point for Susan = _____ room nights?

2) If the # of room nights is less than the Break Even Point shen should Susan outsource or not outsource?

Hi,
I do not need the to know the cost she should charge per room to break even.
I need the break even point that shows at how many rooms per night, it would cost Susan the same amount to clean the room herself as it would to pay Maid Service to do it.

Reference no: EM1347765

Questions Cloud

Constructing direct materials budget : Preparing the direct materials budget: It takes three pounds of direct materials to produce the Regular product and five pounds of direct materials to produce the Deluxe product.

Computing capital budget amount : Clinton Company is financed 40 percent by equity and 60 percent by debt. If the firm expects to earn $20 million in net income and retain 40% of it, how large can the capital budget be before common stock must be sold?

Show incentive pay plans : Show how incentive pay plans - both individual and group - motivate employees to achieve high levels of performance.

Sales volume variance analysis-master vs flexible budget : During the period, actual sales totaled 58,000 units. Prepare a variance report to show the difference between the master budget and the flexible budget.

Calculation of break-even point : Susan Meyer, owner or manager of Meyer's Motor Court in Key West, is planning outsourcing the daily room cleanup for her motel to Duffy's Maid Service. Based on the data related to costs for every of the options, calculate the break-even point for Su..

State diagram for coffee machine controller : Design behavioral specs by using state diagram for coffee machine controller given below: State events. Machine operates ah hourly interval.

Budget variance analysis : Assume that for the second quarter in row, profits are down at Waterfall division. Division Management budgeted $250,000 in profits for the second quarter but actual results were only $197,000 in profits.

Solve problem using maslows motivational theory : Explain how would you solve this problem using Maslow's motivational theory and how would that differ from using Herzberg's and McGregor's?

Explain post empowering the workforce : Suppose how you might deal with those employees who do not "fit" the new company's culture or who are not willing to change and cooperate?

User Account

All Pages