Jacob`s profit: P = $20,000.
Variable cost: 20 x ( the cost per rented room, where x is the number of room-nights ).
Fixed costs: $100,000.
Total Costs: 100,000 + 20 x
Jacob`s income is: 100 x ( the number of room-nights multiplied by $100).
The equation is:
Income - Costs = Profit
100 x - ( 100,000 + 20 x ) = 20,000
100 x - 100,000 - 20 x = 20,000
80 x = 120,000
x = 120,000 : 80
x = 1,500
It means that there were 1,500 room-nights in his hotel.
$20,000 : 1,500 = $13.33
Answer: Contribution per each room-night was $13.33.
