Question

A hotel has an average daily rate (ADR) of $50, fixed costs for each of the 2,200 rooms sold during the month of $15, and a variable cost percentage of 20%. Its contribution margin is:

Answer 1

$10

Step-by-step explanation:

he contribution margin is calculated by subtracting variable costs from selling price.

i.e., selling price- variable cost = contribution margin per unit

in this case

selling price is $50

variable cost

= 20/100 x 50

=0.2 x 50

=$10

contribution margin = $50- $10

=$40