Grand Garden is a hotel with 240 suites. Its regular suite price is $210 per night per suite. The hoteľ's total cost per night is $150 per suite and consists of the following. Variable cost $ 110 Fixed cost 40 Total cost per night per suite $ 150 The hotel manager receives an offer to hold the local Bikers' Club meeting at the hotel in March, which is the hoteľs slow season with a low occupancy rate per night. The Bikers' Club would reserve 220 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? Contribution margin from Bikers' Club special offer: Revenues from special offer Variable costs Contribution margin from this special offer Should the Bikers' Club offer be accepted or rejected?

Grand Garden is a hotel with 240 suites. Its regular suite price is $210 per night per suite. The hoteľ's total cost per night is $150 per suite and consists of the following. Variable cost $ 110 Fixed cost 40 Total cost per night per suite $ 150 The hotel manager receives an offer to hold the local Bikers' Club meeting at the hotel in March, which is the hoteľs slow season with a low occupancy rate per night. The Bikers' Club would reserve 220 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? Contribution margin from Bikers' Club special offer: Revenues from special offer Variable costs Contribution margin from this special offer Should the Bikers' Club offer be accepted or rejected?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Grand Garden is a hotel with 240 suites. Its regular suite price is $250 per night per suite. The hotel's total cost per night is $180 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 220 suites for one night if the hotel accepts a price of $148 per night. $ 140 40 $ 180 (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? accepted
Cityscape Hotels has 200 rooms available in a major metropolitan city. The hotel is able to attract business customers during the weekdays and leisure customers during the weekend. However, the leisure customers on weekends occupy fewer rooms than do business customers on weekdays. Thus, Cityscape plans to provide special weekend pricing to attract additional leisure customers. A hotel room is priced at $180 per room night. The cost of a hotel room night includes the following: Cost Per Room Night(at normal occupancy) Housekeeping service $ 23 Utilities 7 Amenities 3 Hotel depreciation 55 Hotel staff (excluding housekeeping) 42 Total $130 a. What is the contribution margin for a room night if only the hotel depreciation and hotel staff are assumed fixed for all occupancy levels?$ b. What should be considered in setting a discount price for the weekends? The discount price should be set than the variable costs per room night so that the…
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