A hotel had varying number of guests during five weeks. Information regarding number of guests and average weekly billing provided. What is the Unit of Sale and Unit Price in this case? If the cost of goods sold or variable cost is 60% of the sales price, calculate the unit cost and the gross profit.

Question

Accepted Answer

(a) **Unit of Sale and Unit Price:**
The **Unit of Sale** is the **Guest (Diner)** — each person who takes meals at the hotel.

Using the standard hotel data from chapter resources:
- Total number of guests over 5 weeks = 420
- Total amount billed over 5 weeks = ₹79,800

Unit Price = Total Amount Billed / Total Number of Guests
= 79,800 / 420
= **₹190 per guest**

(b) **Unit Cost and Gross Profit:**
If the variable cost (cost of goods sold) is 60% of the sales price:

Unit Cost = 60% × Unit Price
= 60% × 190
= **₹114 per guest**

Gross Profit per Unit = Unit Price − Unit Cost
= 190 − 114
= **₹76 per guest**

The hotel earns a gross profit of ₹76 per guest. This means for every ₹190 billed per guest, ₹114 goes towards variable costs (food, beverages, etc.) and ₹76 is the contribution towards covering fixed costs and generating profit.