HRT 374 Lecture Notes - Lecture 7: Average Selling Price, Contribution Margin, Fixed Cost
31 Aug 2016
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Document Summary
What is the profit at any occupancy point. How will increase in property taxes affect the breakeven point. How many rooms must be sold to achieve a certain profit. Variable cost fluctuate in a linear fashion. Mixed costs can be divided by hi- low, fixed and variable. All costs can be assigned to departments. Everything below p & l are assigned. Contribution margin (cm)= selling price (sp) - variable cost (vc) Break even point= fixed costs/ contribution margin. E. g room sales break even in $ and units: Bep in units= /(40-15)= 187500/25 =7,500 units. Bep in $= 187500/ (100% - 38%) = 187500/0. 62 = ,419. Break even if wan tot make ,000. Excess of sales above break even point. T/f the margin of safety is the excess of profit above break even point
