ogle? a connect ?: Cengage ?Cambridge Diction. ? EasyBb Citation st. G Chegg Stu

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ogle? a connect ?: Cengage ?Cambridge Diction. ? EasyBb Citation st. G Chegg Study i Guld D ESPN D Aul sur www. kaycr erha hapter 19 Homework Saved Help Save &Exit; Sub Check my work 5 Grand Garden is a luxury hotel with 160 suites. Its regular suite rate is $200 per night per suite. The hotel's cost per night is $125 per suite and consists of the following Variable direet labor and naterials cost Pixed cost E($5,870,000/160 suites)+ 365 days Total cost per night per suite s 24 101 125 oints eBook The hotel manager received an offer to hold the local Bikers' Club annual meeting at the hotel in March, which is the hotel's low season with an occupancy rate of under 55%. The Bikers' Club would reserve 40 suites for three nights if the hotel could offer a 55% Print Rolerences discount, or a rate of $90 per night. The hotel manager is inclined to reject the offer because the cost per suite per night is $125 Required: Prepare an analysis of this offer for the hotel manager. rate per night 90.00 cost per night

Explanation / Answer

CONTRIBUTION MARGIN ANALYSIS: Room rate per night 90 Variable cost per night 24 Contribution per night 66 Total number of suites occupied 40 Incremental contribution per night 2640 Number of nights offer occupied 3 Incremental contribution of offer 7920 Less: Incremental fixed cost 0 Incremental income from offer 7920

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