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Calculate the contribution margin per unit of service

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Question - Bondi Panorama is a boutique motel located near Bondi Beach. For one-night accommodation per person, the motel charges $50. The owner of the motel estimates that the variable cost per person is $20, which includes food and room services. The fixed cost is estimated to be $42,000 per year.

Required - Calculate

(1) 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) The annual breakeven point in dollars.

(3) Assuming the motel targets a net profit of $60,000 a year before tax, calculate the number of units of service required to reach this target.

Reference no: EM132612839

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