# Solve: Net Income and Break Even Calculation

Suppose a particular Motel 6 has annual fixed costs of $3.2 million for its 400-room motel, average daily room rents of $50, and average variable costs of $10 for each room rented. It operates 365 days per year.

1. How much net income on rooms will Motel 6 generate (a) if the motel is completely full throughout the entire year and (b) if the motel is half full?

2. Compute the break-even point in number of rooms rented. What percentage occupancy for the year is needed to break even?

https://brainmass.com/business/accounting/solve-net-income-break-even-calculation-290722

#### Solution Preview

1. Net Income= Total revenue - total cost

(a) If it is completely full, the number of rooms rented = 400.

Total revenue = 400 rooms X $50 per day X 365 days = 7,300,000

Total cost = 400 X $10 X 365 (variable) + 3,200,000 ...

#### Solution Summary

This solution explains how to compute the necessary calculations to solve for the net income and breakeven point for the particular Motel 6 in question. All calculations and formulas are shown in a step-wise fashion.