Jacob rents rooms in his hotel for an average of $100 per night. the variable cost per rented room is $20, to cover maid service and utilities. his fixed costs are $100,000 and his profit last year was $20,000. calculate the contribution per unit (contribution per each room-night

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.