Maurice Tutor

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Teaching Since: May 2017
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  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 20 Aug 2017 My Price 8.00

Cityscape Hotels

Accepting business at a special price for a service company

 

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?

Answers

Maurice Tutor
(5)
Status NEW Posted 20 Aug 2017 09:08 AM My Price 8.00

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