Golden Suites is a luxury hotel with 200 suites. Its regular suite rate is $495 per...

 

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Golden Suites is a luxury hotel with 200 suites. Its regular suite rate is $495 per night per suite. The hotel's cost per night is $225 per suite and consists of the following: Variable direct labor, direct materials and overhead Fixed cost Total cost per night per suite $25 $200 $225 A national non profit organization would like to hold their annual meeting at the hotel during a period of the year when hotel occupancy is very low. The non-profit would reserve 50 suites for four nights if the hotel could offer a discounted rate of $200 per night. The hotel manager is inclined to reject the offer because the cost per suite per night is $225. Required: a. Prepare a quantitative analysis of this offer for the hotel manager. b. Based on your quantitative analysis, should the offer be accepted or rejected? c. How much will net income increase or decrease if the manager does accept the offer? d. What is the lowest price per night the manager should accept. e. Explain one qualitative issue the manager should consider for this decision. Hint: Merely listing a concern will not earn credit. Golden Suites is a luxury hotel with 200 suites. Its regular suite rate is $495 per night per suite. The hotel's cost per night is $225 per suite and consists of the following: Variable direct labor, direct materials and overhead Fixed cost Total cost per night per suite $25 $200 $225 A national non profit organization would like to hold their annual meeting at the hotel during a period of the year when hotel occupancy is very low. The non-profit would reserve 50 suites for four nights if the hotel could offer a discounted rate of $200 per night. The hotel manager is inclined to reject the offer because the cost per suite per night is $225. Required: a. Prepare a quantitative analysis of this offer for the hotel manager. b. Based on your quantitative analysis, should the offer be accepted or rejected? c. How much will net income increase or decrease if the manager does accept the offer? d. What is the lowest price per night the manager should accept. e. Explain one qualitative issue the manager should consider for this decision. Hint: Merely listing a concern will not earn credit.

Answer rating: 100% (QA)

Ansa It is given that non profit would book the hotel when its occupancy is low ie the... View the full answer