Cost volume profit applied to the service industry.
A hotel has 10 000 room nights available per annum, charges $50 per room per night, pays fixed costs of $150 000 per annum and variable costs of $16 for each night a room is occupied. If the price per room per night is increased by 5 per cent, the break-even occupancy rate as a percentage (rounded) is

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The new price per room per night is $52.50. The contribution margin per room is $52.50 - $16 = $36.50. The break-even point in room nights is $150,000 / $36.50 ≈ 4,110. The break-even occupancy rate is (4,110 / 10,000) * 100% ≈ 41%.

Cost Volume Profit Applied to the Service Industry