Question

You run a hospital with 100 rooms. Fixed daily cost is $876.00 which includes staff salary, property charges, maintenance etc. Variable cost per room is $13.00 which includes cleaning, equipment rentals, utility cost etc. which is incurred only when the room is full. You charge $79.00 per room per day. You sold 32.00 rooms today, how much profit/loss did you earn for today.

Answer 1

profit = $1,236

Step-by-step explanation:

fixed daily costs $876

variable cost per room $13

revenue per room $79

contribution margin per room = $79 - $13 = $66

32 rooms were sold today = $66 x 32 = $2,112

- fixed costs = ($876)

daily profit = $1,236

The contribution margin per unit is the difference between the additional revenue obtained from selling one more unit minus the additional costs of selling that unit.