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E6-1 Compute break-even point and margin of safety
The Soma Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $60
a night. Operating costs are as follows.
	Salaries		$10,600 per month
	Utilities		2,400 per month
	Depreciation		1,500 per month
	Maintenance		800 per month
	Maid service		8 per room
	Other costs		34 per room
Instructions
(a)	Determine the inn's break-even point in (1) number of rented rooms per month and
	(2) dollars.
(b)	If the inn plans on renting an average of 50 rooms per day (assuming a 30-day month),
	what is (1) the monthly margin of safety in dollars and (2) the margin of safety ratio?
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .

After you have completed E6-1, consider the following additional questions.
1.	Assume that the rental rate per room changed to $65 per night. Recalculate break-even point
	in units and dollars. Round CM ratio to one decimal point.
2.	If the inn plans to rent 60 rooms average per day at the new rate of $65 per night, recalculate the margin
	of safety in dollars and the margin of safety ratio.

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