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Compute: Breakeven Analysis

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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) $6000
Variable cost per occupied room per night $ 20
Revenue per occupied room per night $ 75
a. Write the expression for total cost per month. Assume 30 days per month.
b. Write the expression for total revenue per month.
c. If there are 12 guest rooms available, can they break even?
d. What percentage of rooms would need to be occupied, on average, to break even?

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Monthly fixed cost (loan payment, taxes, insurance, maintenance) $6000
Variable cost per occupied room per night $ 20
Revenue per occupied room per night $ 75
Let X be the average number of rooms occupied per night.
Then, the total Variable cost per night for the month = $ ...

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Anwesha Ghosh, MSc
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  • MSc, Indian Institute of Technology - Roorkee (I.I.T.-ROORKEE)
  • BSc, Banaras Hindu University
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