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 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 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? Answer is complete but not entirely correct. Contribution margin from Bikers' Club special offer: Revenues from special offer Variable costs $ 110 40 $ 150 Contribution margin from this special offer Should the Bikers' Club offer be accepted or rejected? $ $ 33,000 24,200 X 8,800 accepted

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. 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