Question

A fellow MBA alum from Lynn University, who now works in Admission at Lynn University would like to give each MBA student a benefit, which is programmed into the Lynn University ID card. This benefit would allow the student one night each month, depending on availability, for a room at the Marriott Courtyard for $40. Normally the room rate is $100 and the full cost of a night’s stay is $50. Discuss whether or not this would be feasible, i.e. Marriott is able to do this transaction without it being a donation.

Answer 1

This would be a feasible deal beacuse full cost of the room is $ 50 which would include fixed and variable both types of cost. Condition of Depending on avaiability is attached to the offer, it means if the room would be vacate then only offer would be materialized and if room is vacate, there would be no earning and fixed cost would be incurred so it is better to offer the room at a price of 40 which would be enough to cover total variable cost and a portion of fixed cost too.