^{ch 19 exercise}

Grand Garden is a luxury hotel with 155 suites. Its regular suite rate is $210 per night per suite. The hotels cost per night is $135 per suite and consists of the following.

The hotel manager receives an offer to hold the local Bikers Club annual meeting at the hotel in March, which is the hotels low season with an occupancy rate of under 55%. The Bikers Club would reserve 45 suites for three nights if the hotel could offer a 55% discount, or a rate of $94 per night. The hotel manager is inclined to reject the offer because the cost per suite per night is $135. Prepare an analysis of this offer for the hotel manager. Should the offer from the Bikers Club should be accepted or rejected? What is the contribution margin from accepting the offer?

help!! thank you

Variable direct labor and materials cost Fixed cost [($5,970,000/155 suites) = 365 days] Total cost per night per suite $ 29 106 $ 135 Contribution margin analysis Room rate per night Variable cost per night $ 125.00