VC 12

Grand Garden is a hotel with 200 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 160 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