1) Mount Snow operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. Investors would like to earn a 20% return on the company's $110 million of assets. The company incurs primarily fixed costs to groom the runs and operate the lifts. Mount Snow projects fixed costs to be $38,200,000 for the ski season. The resort serves 875,000 skiers and snowboarders each season. Variable costs are $9 per guest. Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over the lift ticket prices.

1.	Would Mount Snow emphasize target costing or cost-plus pricing. Why?
2.	If other resorts in the area charge $58 per day, what price should Mount Snow charge?

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1. Would Mount Snow emphasize target costing or cost-plus pricing. Why?

Mount Snow should emphasize a ________ (cost-plus or target) approach to pricing because it has been able to differentiate its ski resort from others in the area. Because of its favorable reputation, managers will have ______(no or some) control over pricing. Of course, they still need to consider whether the _______ (cost-plus or target) price is within the range customers are willing to pay.

2. If other resorts in the area charge $58 per day, what price should Mount Snow charge?