The BV hotel has 50 rooms and is open for 360 days a year, giving a total number of room nights of 50 x 360 = 18,000. The charge for each room is £80 per night and the variable costs of each night's stay are £20 plus breakfast costing £10. Total fixed costs of the hotel are £540,000 per annum. What is the break-even point in room nights?

Question

Quizplus · Accepted Answer

The break-even point in room nights is calculated by dividing the total fixed costs by the contribution margin per room night. The contribution margin per room night is the room charge (£80) minus the variable costs (£20 + £10 = £30), which equals £50. Therefore, the break-even point is £540,000 / £50 = 10,800 room nights.

The BV Hotel Has 50 Rooms and Is Open for 360