Exercise 06-13 Analyzing variable cost for a special order LO A1 Grand Garden is a luxury hotel with 150 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 direct labor and materials cost Fixed cost [($5,870,000/150 suites) + 365 days ] Total cost per night per suite $ 18 107 $ 125 The hotel manager receives 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 50%. The Bikers' Club would reserve 40 suites for three nights if the hotel could offer a 50% discount, or a rate of $100 per night. The hotel manager is inclined to reject the offer because the cost per suite per night is $125. 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? Contribution margin analysis