Q1: Cost Volume Profit Analysis.
As part of their application for a loan to buy Lakeside Farm, a property they hope to develop as a bed-and-breakfast operation, the prospective owners have projected:
| Monthly fixed cost (loan payment, taxes, insurance, maintenance) | $7500 |
| Variable cost per occupied room per night | $ 25 |
| Revenue per occupied room per night | $ 85 |
| a. | Write the expression for total cost per month. Assume 30 days per month. |
| b. | Write the expression for total revenue per month. |
| c. | They have 12 guest rooms available per night. How many rooms need to be occupied at break-even per night? What percentage of rooms would need to be occupied, on average, to break even? Draw the break-even chart. |
