Question

Nikki has 50 rooms left to sell tomorrow night. Her forecast indicates she would sell 20 of them at her rack rate of $100.00. A group would now like to buy all 50 of the available rooms for $75.00 each. Assume her forecast is accurate. What is the amount of incremental revenue Nikki would achieve if she decided to sell all 50 of her available rooms to the group?

Answer 1

$1,750

Step-by-step explanation:

The computation of the incremental revenue is shown below:

= Number of available rooms × selling price per room

= 50 rooms available × $75

= $3,750

And, the forecasted sales would be

= Number of rooms sold × rack rate

= 20 rooms × $100

= $2,000

So, the incremental revenue would be

= Sales - forecasted sales

= $3,750 - $2,000

= $1,750