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Using the information in Extract G, calculate how many rooms need to be occupied each month for the business to break-even - Edexcel - A-Level Business - Question 2 - 2022 - Paper 2

Question 2

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Using the information in Extract G, calculate how many rooms need to be occupied each month for the business to break-even. Revenue per room per night: £84 Variable... show full transcript

Worked Solution & Example Answer:Using the information in Extract G, calculate how many rooms need to be occupied each month for the business to break-even - Edexcel - A-Level Business - Question 2 - 2022 - Paper 2

Step 1

Calculate Contribution per Room

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Answer

The contribution per room can be calculated as the difference between the revenue and variable costs:

ext{Contribution per room} = ext{Revenue per room} - ext{Variable costs per room} = 84 - 34 = £50

Step 2

Calculate Monthly Fixed Costs

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Answer

To find the monthly fixed costs, divide the annual fixed costs by 12:

ext{Monthly fixed costs} = \frac{£30,000}{12} = £2,500

Step 3

Calculate Break-even Rooms per Month

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Answer

To find the number of rooms that need to be occupied each month to break even, divide the monthly fixed costs by the contribution per room:

ext{Break-even rooms} = \frac{ ext{Monthly fixed costs}}{ ext{Contribution per room}} = \frac{£2,500}{£50} = 50 ext{ rooms}

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