Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Matt Simpson owns and operates Quality Craft Rentals, which offers canoe rentals and shuttle service on the Nantahala River. Customers can rent canoes at one

Matt Simpson owns and operates Quality Craft Rentals, which offers canoe rentals and shuttle service on the Nantahala River. Customers can rent canoes at one station, enter the river there, and exit at one of two designated locations to catch a shuttle that returns them to their vehicles at the station they entered. Following are the costs involved in providing this service each year:
Fixed Costs Variable Costs
Canoe maintenance $ 3,150 $ 8.00
Licenses and permits 3,8500
Vehicle leases 6,2500
Station lease 7,7700
Advertising 6,8506.00
Operating costs 21,8506.00
Quality Craft Rentals began business with a $26,500 expenditure for a fleet of 30 canoes. These are expected to last 10 more years, at which time a new fleet must be purchased. Rentals have been stable at about 6,700 per year.
Required:
Matt is happy with the steady rental average of 6,700 per year. For this number of rentals, what price should he charge per rental for the business to make an annual 15% before-tax return on assets using life-cycle costs? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial and Managerial Accounting the basis for business decisions

Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello

18th edition

125969240X, 978-1259692406

More Books

Students also viewed these Accounting questions

Question

=+b. What is the balance of the controlling account at May 31?

Answered: 1 week ago