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Grand Garden is a hotel with 150 suites. Its regular suite price is $250 per night per suite. The hotel's total cost per night is
Grand Garden is a hotel with 150 suites. Its regular suite price is $250 per night per suite. The hotel's total cost per night is $140 per suite and consists of the following.
Variable cost | $ 110 |
---|---|
Fixed cost | 30 |
Total cost per night per suite | $ 140 |
The hotel manager receives an offer to hold the local Bikers Club meeting at the hotel in March, which is the hotels slow season with a low occupancy rate per night. The Bikers Club would reserve 150 suites for one night if the hotel accepts a price of $125 per night. (a) What is the contribution margin, revenues, and variable costs from this special offer?
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