A hotel had varying number of guests during five weeks. Information regarding number of guests and average weekly billing is presented in a table. (a) What is the Unit of Sale and Unit Price in this case? (b) 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:
- 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.