=+SA 25-2 Decision on accepting additional business 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?