## Related questions with answers

Stop-n-Shop operates a downtown parking lot containing 800 parking spaces. The lot is open 2,500 hours per year. The parking charge per car is 50 cents per hour; the average customer parks two hours. Stop-n-Shop rents the lot from a development company for $\$ 7,250$ per month. The lot supervisor is paid $\$ 24,000$ per year. Five employees who handle the parking of cars are paid $\$ 300$ per week for 50 weeks, plus $\$ 600$ each for the two-week vacation period. Employees rotate vacations during the slow months when four employees can handle the reduced load of traffic. Lot maintenance, payroll taxes, and other costs of operating the parking lot include fixed costs of $\$ 3,000$ per month and variable costs of 5 cents per parking-space hour.

b. What is the contribution margin ratio? What is the annual break-even point in dollars of parking revenue?

Solution

VerifiedIn this problem, we will determine the contribution margin ratio and the break-even point.

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