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Grand Garden is a hotel with 220 suites. Its regular suite price is $220 per night per suite. The hotel's total cost per night is

Grand Garden is a hotel with 220 suites. Its regular suite price is $220 per night per suite. The hotel's total cost per night is $150 per suite and consists of the following.

Variable cost $ 110
Fixed cost 40
Total cost per night per suite $ 150

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 180 suites for one night if the hotel accepts a price of $118 per night. (a) What is the contribution margin from this special offer? (b) Should the Bikers' Club offer be accepted or rejected?

Revenues from special offer

Variable costs

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