Question

**Hotel Decent has a fixed cost of $100,000 and a variable
cost of $10/night. Assuming that the room rent for the hotel was
$35/night:**

What is the Contribution per Unit?

What is the Break Even Point?

**Assuming that the hotel rents out 6,000 rooms per night
at $35/night, then using the same fixed cost and variable cost as
the previous two questions:**

How much would the Total Revenue be?

How much would the total variable cost be?

How much profit does the hotel make?

Answer #1

1) Contribution Margin per Units = Selling Price-Variable cost Per Unit

= 35-10 = **$ 25
Per Unit**

2) Break Even Point

=in Units = Fixed cost / CM per Unit = 100,000/25 = **4000 Units**

Dollars = Units *Selling Price = 4,000*35 = 140,000

**If 6000 Rooms are Rented**

1) Total Revenue = Rooms * Rent per Night = 6,000*35 =
**210,000**

2) Total Variable cost = Rooms * Variable cost Per room =
6,000*10 = **60,000**

3) profit = Revenue -Variable cost - Fixed Cost =
210,000-60,000-100,000 = **50,000**

a
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