19-14

Empire Plaza Hotel is a luxury hotel with 404 rooms. Its regular toom rate is $320 per night per room. The hotel's cost is $175 per night per room and consists of the following Variable direct labor and materials cost Fixed cost Total cost per night per room $ 48 122 $ 175 The hotel manager receives an offer to hold the Junior States of America (JSA) convention at the hotel in February, which is the hotel's low season with an occupancy rate of under 45%. USA would reserve 100 rooms for four nights of the hotel could offer a 50% discount, or a rate of $160 per night. The hotel manager is inclined to reject the offer because the cost per room per night is $175. Should the offer from JSA should be accepted or rejected? What is the contribution margin from accepting the offer? Contribution margin analysis