Question
Berry Fields golf course is planning for the coming season. Investors would like to earn a 12% return on the companies $49,000,000 of assets. The
Berry Fields golf course is planning for the coming season. Investors would like to earn a 12% return on the companies $49,000,000 of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $21,000,000 for the golfing season. About 450,000 golfers are expected each year. Variable costs are about $19 per golfer. Berry Fields golf course has a favorable reputation in the area and therefore, has some control over the price of a round of golf. Using a cost plus approach, what price should Berry Fields charge for a round of golf?
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