Solve this question financial accounting Grand Garden is a luxury hotel with 160 suites. Its regular suite rate is $210 pernight per suite. The hotel's cost per night is $135 per suite and consists of thefollowing.Variable direct labor and materials cost$33Fixed cost ((55,978,800/160 suites) + 365 days) 102Total cost per night per suite$135The hotel manager receives an offer to hold the local Bikers' Club annualmeeting at the hotel in March, which is the hotel's low season with an occupancyrate of under 60%. The Bikers' Club would reserve 40 suites for three nights ifthe hotel could offer a 60% discount or a rate of $84 per night. The hotelmanager 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 fromthe Bikers' Club be accepted or rejected? What is the contribution margin fromaccepting the offer?

Step 1: Define Contribution Margin AnalysisA contribution margin analysis is a tool used in…

Answered: Grand Garden is a luxury hotel with 160…

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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Tim Urban, owner/manager of Urban's Motor Court in Key West, is considering outsourcing the daily room cleanup for his motel to Duffy's Maid Service. Tim rents an average of 50 rooms for each of 365 nights (365 × 50 equals the total rooms rented for the year). Tim's cost to clean a room is $12.50. The Duffy's Maid Service quote is $18.50 per room plus a fixed cost of $25,000 for sundry items such as uniforms with the motel's name.Tim's annual fixed cost for space, equipment, and supplies is $60,000. Based on the given information related to costs for each of the options, the crossover point for Tim =_________ room nights (round your response to the nearest whole number).
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fr
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Domestic
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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