# B margin of safety actual rentals break even rentals

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(b)Margin of safety: Actual rentals - Break-even rentals=(4,000 – 3,000) = 25% Actual rentals4,000
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(c)Variable costs per person per night:Fixed costs: Laundry and cleaning\$10.00Depreciation\$60,000 Breakfast8.00Maintenance41,000 Total variable cost per unit\$18.00Cleaning24,000 Real estate tax10,000 Total fixed\$135,000 Break-even number of persons per night rentals: Fixed costs=\$135,000 = 2,700 rentals Contribution margin per person per night\$50* *Sales price per unit\$68 Variable cost per unit18 Unit contribution margin\$50 Break-even point in sales dollars: 2,700 × \$68 = \$183,600 Part 2: Multiple Choice Questions 1.A variable cost is a cost that
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2.A cost whichremains constant per unit at various levels of activity is a
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3.A fixed cost is a cost which
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4.Two costs at Bradshaw Company appear below for specific months of operation. MonthAmountUnits Produced Delivery costsSeptember\$40,00040,000 October55,00060,000 UtilitiesSeptember\$84,00040,000 October126,00060,000 Which type of costs are these? a.Delivery costs and utilities are both variable. b.Delivery costs and utilities are both mixed. c.Utilities are mixed and delivery costs are variable. d.Delivery costs are mixed and utilities are variable.
5. An increase in the level of activity will have the following effects on unit costs for variable and fixed costs: Unit Variable CostUnit Fixed Cost
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6.Fixed costs normally willnotinclude
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7.The increased use of automation and less use of the work force in companies has caused a trend towards an increase in
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