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Calculate the contribution margin per unit of service

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Question - Parra Skyline is a hotel located near Parramatta Station. For one night accommodation per person, the hotel charges $60. The owner of the hotel estimates that the variable cost per person is $20, which includes food and room services. The fixed cost is estimated to be $50,000 per year.

Required -

(1) Calculate the contribution margin per unit of service (the per unit of service is one-night accommodation for one guest) and the contribution margin ratio.

(2) Calculate the annual breakeven point in dollars?

(3) Assuming the hotel targets a net profit of $90,000 a year after tax, calculate the number of units of service required to reach this target.

Reference no: EM132633659

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