Reference no: EM132937307

Moor-n-More operate a boat mooring service in the downtown harbor with 1,600 docking spaces. The business is open 5,000 hours per year. The mooring charge per boat is $1 per hour; the average boater docks for two hours. Moor-n-More rents the harbor space from the Harbor Authority for $14,500 per month. The general manager is paid $48,000 per year. Five employees assist in the operations and are paid $600 per week for 50 weeks, plus $1,200 each for a two-week vacation period. Employees rotate their vacations. Other costs include fixed city taxes of $6,000 per month and variable costs of 10 cents per occupied mooring-space hour (a usage tax charged by the Harbor Authority).

Problem (1) Draw a cost-volume-profit graph for Moor-n-More on an annual basis. Use thousands of mooring-space hours as the measure of volume of activity.

Problem (2) What is the contribution margin ratio? What is the annual break-even point in dollars of mooring revenue?