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 15 % return on the company's $ 115 million of assets. The company incurs primarily fixed costs to groom the runs and operate the lifts. Mount Snow projects fixed costs to be $ 43,500,000 for the ski season. The resort serves about 900,000 skiers and snowboarders each season. Variable costs are $ 10 per guest. The resort had such a favorable reputation among skiers and snowboarders that it had some control over the lift ticket prices. Assume that Mount Snow's reputation has diminished and other resorts in the vicinity are charging only $ 66 per lift ticket. Mount Snow has become a price-taker and won't be able to charge more than its competitors. At the market price, Mount Snow's managers believe they will still serve 900,000 skiers and snowboarders each season.

Req

2. Assume that

Mount Snow

has found ways to cut its fixed costs to

$ 38.1 million. What is its new target variable cost per skier/snowboarder? Compare this to the current variable cost per skier/snowboarder. Comment on your

results.

Complete the following table to calculate

Mount Snow's

new target variable cost per customer. (Round your final answer to the nearest cent.)

The drop down options are:

Desired Profit

Number of Skiers

Reduced level of fixed costs

Revenue at market price

Target Revenue

Target total costs

Target total Variable cost

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 15% return on the company's $115 million of assets. The company incurs primarily fixed costs to groom the runs and operate the lifts. Mount Snow projects fixed costs to be $43,500,000 for the ski season. The resort serves about 900,000 skiers and snowboarders each season. Variable costs are $10 per guest. The resort had such a favorable reputation among skiers and snowboarders that it had some control over the lift ticket prices. Assume that Mount Snow's reputation has diminished and other resorts in the vicinity are charging only $66 per lift ticket. Mount Snow has become a price-taker and won't be able to charge more than its competitors. At the market price, Mount Snow's managers believe they will still serve 900,000 skiers and snowboarders each season. Read the requirements results. Complete the following table to calculate Mount Snow's new target variable cost per customer. (Round your final answer to the nearest cent) Less Less Target total variable costs Divided by: Target variable cost per skier/snowboarder