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Exercise 19-17 (Algo) Analyzing a special offer for a service company LO P3 Grand Garden is a hotel with 100 suites. Its regular suite price
Exercise 19-17 (Algo) Analyzing a special offer for a service company LO P3 Grand Garden is a hotel with 100 suites. Its regular suite price is $240 per night per suite. The hotel's total cost per night is $170 per suite and consists of the following Variable cost Fixed cost Total cost per night per suite The hotel manager receives an offer to hold the local Bikers Club meeting at the hotel in March, which is the hotel's slow season with a low occupancy rate per night. The Bikers' Club would reserve 70 suites for one night if the hotel accepts a price of $138 per night (a) What is the contribution margin from this special offer? (b) Should the Bikers' Club offer be accepted or rejected? $ 130 40 $ 170 S Contribution margin from Bikers' Club special offer: Revenues from special offer Variable costs Contribution margin from this special offer Should the Bikers' Club offer be accepted or rojected? 700 1.260 560 $ accepted
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