Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please help correct the answers in red Exercise 19-13 Analyzing variable cost for a special order LO A1 Grand Garden is a luxury hotel with
Please help correct the answers in red
Exercise 19-13 Analyzing variable cost for a special order LO A1 Grand Garden is a luxury hotel with 160 suites. Its regular suite rate is $210 per night per suite. The hotel's cost per night is $135 per suite and consists of the following. $ Variable direct labor and materials cost Fixed cost [($5,870,000/160 suites) + 365 days ] Total cost per night per suite 101 $ 135 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 60%. The Bikers' Club would reserve 45 suites for three nights if the hotel could offer a 60% discount, or a rate of $84 per night. The hotel manager is inclined to reject the offer because the cost per suite per night is $135. 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? Answer is complete but not entirely correct. Contribution margin analysis Total cost per night per suite X $ 11,340.00 X Contribution per suite per night X 84.00 X Contribution margin per night per suite $ 6,750.00 X Number of nights 3 Number of suites 45 Contribution margin from special offer 911,250 Should management accept the special offer? Yes Contribution margin analysis Contribution per suite per night Fixed cost per night Room rate per night Total cost per night per suite Variable cost per nightStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started