Question

Andrew rents rooms in his hotel for an average of $91 per night. The variable cost per rented room is $38. His fixed costs are $59,000 per month. How many rooms does he have to rent per month in order to break even?

Answer 1

Andrew has to rent 1114 rooms per month in order to break even

Step-by-step explanation:

Break-even Point is the point at which the units sold (or revenue) by a firm neither makes a profit nor a loss.

Break-even (units) = Fixed Cost / Contribution per unit

= $59,000 / ( $91 - $38)

= $59,000 / $53

= 1113.207547

= 1114 rooms