HELP!!! breakeven?!!!!?
BREAK EVEN PROBLEM!!!!HELP? Phil and Carol eloped (at 59 and 46) to New Mexico and then told the kids they were moving there permanently. After 5 years in downtown Albuquerque, Carol made one of her frequent flights east to visit family. She returned to find that Phil had rented out a bedroom, declaring they were in the "Bed and Breakfast" business. In a year, they expanded to a pricy suburb by buying/renovating a larger estate with 6 rooms or apartments. Phil cooked breakfast; Carol bought; they lived in a separate suite and frequently hosted guests for cocktail hour. The average life-span for B&B owners is about 4 years. After about 3 years, Phil was tired of doing breakfasts. He and Carol build their own home next door, hired Maggie to run the B&B, and pitched in when needed. You have been asked to help them see where this business is financially. Use the following information to prepare a two-page analysis. Room prices range, but average $85 per night. Last year without Maggie, they generated about $30,000 in revenue. Expenses this year (e.g., advertising, telephone, mortgage, repairs/maintenance, utilities, Maggie's base salary) are generally fixed ($34,739) except for breakfast which is variable (last year = $3,729). Maggie's salary consists of a base of $7500 plus a commission of 35% of revenue over $25.000, and a free room (the separate suite). Questions: 1) Last year (before Maggie) what was breakeven? Did they make a profit? What was the maximum profit that could be made? 2) With Maggie, what is the new breakeven? Is this a realistic possibility? What should they do? Note: Your analysis and response to the above questions should be approximately 2 -3 pages in length.
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Break-even is the point at which the amount of revenue brought in is exactly equal to the cost of doing business - that is all expenses of the business. If you have $10 in your pocket at the beginning of a month, receive more, and spend some - break even is the amount that you have to bring in so that after you pay your bills you still have $10 in your pocket at the end of the month. So - take the numbers from your problem, above and separate them between incomes and expenses to reach the number that represents break even. The requests of 2-3 pages of analysis and explanation, so I guess you need to explain each step of your process in reaching the number requested. After you do this exercise, you will be far more able to perform these calculations in your work life and career.
Title : HELP!!! breakeven
Description : HELP!!! breakeven?!!!!? BREAK EVEN PROBLEM!!!!HELP? Phil and Carol eloped (at 59 and 46) to New Mexico and then told the kids they were m...