Question

On the twentieth day of the month, room sales at the Motor Lodge Motel exceeded its breakeven point for the month. Revenue generated by room sales during the remaining days of the month will: Group of answer choices decrease in proportion to the additional room sales. cover the fixed costs associated with those additional room sales. be pure profit for the motel. increase at a faster rate than the costs associated with those sales.

Answer 1

Increase at a faster rate than the costs associated with those sales.

Step-by-step explanation:

Generally, the break-even point refers to the point where total cost and total revenue are equal. This implies it is a point at which there is neither gain nor loss.

Specifically, break even unit therefore refers to the sales unit at which total cost is equal to the total revenue. When the unit sold is greater than the break even unit, total revenue will be greater than the total cost, while when the unit sold is less than the break even unit, total revenue will be less than the total cost.

From the question, when the room sales at the Motor Lodge Motel exceeded its break-even point for the month on the twentieth day of the month, it implies that any extra room sales will increase the revenue more than the costs associated with those sales.

Therefore, revenue generated by room sales during the remaining days of the month will increase at a faster rate than the costs associated with those sales.