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    Argosy University/ Phoniex University/
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Category > Accounting Posted 28 Jul 2017 My Price 11.00

special price for a service company

Accept business at a special price for a service company

 

If you are not familiar with Priceline.com Inc., go to its Web site. Assume that an individual “names a price” of $85 on Priceline.com for a room in Nashville, Tennessee, on August 22. Assume that August 22 is a Saturday, with low expected room demand in Nashville at a Marriott International, Inc., hotel, so there is excess room capacity. The fully allocated cost per room per day is assumed from hotel records as follows:

 

Housekeeping  labor cost*

$  38

Hotel depreciation expense

43

Cost of room supplies (soap, paper, etc.)

8

Laundry labor and material cost*

10

Cost of desk staff

6

Utility cost (mostly air  conditioning)

         5

Total cost per room per day

$110

*Both housekeeping and laundry staff include many part-time workers, so that the workload is variable to demand.

 

Should Marriott accept the customer bid for a night in Nashville on August 22 at a price of  $85?

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Maurice Tutor
(5)
Status NEW Posted 28 Jul 2017 09:07 PM My Price 11.00

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