Suppose Sunnyside Hotel has annual fixed costs applicable to its rooms of $1.0 million for its 300-room hotel.Average daily room rents are $60 per room,and average variable costs are $10 for each room rented.It operates 365 days per year.What is the break-even point in number of rooms rented?
A) 20,000
B) 30,000
C) 100,000
D) 120,000

Question

Quizplus · Accepted Answer

The break-even point in units can be calculated using the formula: Break-even point = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Here, Fixed Costs = $1,000,000, Selling Price per Unit = $60, and Variable Cost per Unit = $10. Thus, Break-even point = $1,000,000 / ($60 - $10) = $1,000,000 / $50 = 20,000 rooms.

Suppose Sunnyside Hotel Has Annual Fixed Costs Applicable to Its