Given:
Rent per night = $100
Variable cost per rented room = $20
Fixed cost = $100,000
Profit last year = $20,000
To find:
Contribution of Jacob per unit
Solution:
Contribution per unit is the difference between selling price per unit and variable costs per unit. The formula is as follows,
[tex]\text{Contribution margin per unit = Selling price per unit - Variable cost per unit}[/tex]
Here, Selling price per unit is the rent in the hotel per night. On substituting the given values in the above formula we get,
[tex]\text{Contribution per unit }=\%100-\$20\rightarrow\$80[/tex]
Therefore, the contribution per unit is $80.
