value 2.00 polnts Grand Garden is a luoury hotel wth 15 suites Iis regular suite

Question

value 2.00 polnts Grand Garden is a luoury hotel wth 15 suites Iis regular suite rate is $210 per night per suite. The hoter's cost per night is $135 per suite and consists of the following. per suite. The hoter's Variable direct labor and materials cost Fixed cost [(S5,870,000/155 suites)+365 days] $ 31 104 Total cost per night per suite $ 135 Th wi suites for three nights if the hotel could offer a 50% discount, ora rate of $105 per night. The hotel manager is inclined to reject the offer because the cost per suite per night is $135. nager received an offer to hold the local Bikers' Club annual meeting at the hotel in March hotel's low season with an occupancy rate of under 50%. The Bikers' Club would reserve 40 1. Required: Prepare an analysis of this offer for the hotel manager Contribution margin analysis

Explanation / Answer

Solution :-

Particulars Amount ($) Revenue (40*3*$105) 12600 Less : Variable Cost (40*3*$31) 3720 Contribution Margin ($12600 - $3720) 8880

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