If you are not familiar with Priceline.com Inc., go to its Web site. Assume that an individual “names a price” of $70 on Priceline.com for a room in Dallas, Texas, on August 24. Assume that August 24 is a Saturday, with low expected room demand in Dallas at a Marriott International, Inc., hotel, so there is excess room capacity. The fully allocated cost per room per day is assumed from hotel records as follows:
Housekeeping labor cost* ........ $ 34
Hotel depreciation expense ......... 42
Cost of room supplies (soap, paper, etc.) ... 6
Laundry labor and material cost* ...... 10
Cost of desk staff .............. 5
Utility cost (mostly air conditioning) .... 4
Total cost per room per day ....... $101
*Both housekeeping and laundry staff include many part-time
workers, so that the workload is variable to demand.

Should Marriott accept the customer bid for a night in Dallas on August 24 at a price of $70?