Grand Garden is a hotel with 180 suites. Its regular suite price is $240 per night per suite. The hotel's total cost per night is $170 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 B

Question

Grand Garden is a hotel with 180 suites. Its regular suite price is

$240

per night per suite. The hotel's total cost per night is

$170

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 150 suites for one night if the hotel accepts a price of

$138

per night. (a) What is the contribution margin from this special offer? (b) Should the Bikers' Club offer be accepted or rejected? Contribution margin from Bikers' Club special offer: Revenues from special offer Variable costs Should the Bikers' Club offer be accepted or rejected?

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