Jacob rents rooms in his hotel for an average of $100 per night. The variable cost per rented room is $20, to cover maid service and utilities. His fixed costs are $100,000 and his profit last year was $20,000. For Jacob, the contribution per unit is
A) $100.
B) $80.
C) $800.
D) $1,000.
E) It cannot be determined from the information provided.

Question

Quizplus · Accepted Answer

Contribution per unit = Selling price per unit - Variable cost per unit= $100 - $20= $80

Jacob Rents Rooms in His Hotel for an Average of $100