Mount Snow operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. i (Click the icon to view the information.) i More Info -X answer Requirements -X Investors would like to earn a 15% return on investment on the company's $135,000,000 of assets. Mount Snow projects fixed costs to be $36,000,000 for the ski season. The resort serves about 750,000 skiers and snowboarders each season. Variable costs are about $13 per guest. Last year, due to its favorable reputation, Mount Snow was a price-setter and was able to charge $5 more per lift 1. If Mount Snow cannot reduce its costs, what profit will it earn? State your answer in dollars ticket than its competitors without a reduction in the number of customers it and as a percent of assets. Will investors be happy with the profit level? received. 2. Assume Mount Snow has found ways to cut its fixed costs to $34,000,000. What is its new target variable cost per skier/snowboarder? Assume that Mount Snow's reputation has diminished and other resorts in the vicinity are charging only $83 per lift ticket. Mount Snow has become a price-taker and will not be able to charge more than its competitors. At the market price, Print Done Mount Snow managers believe they will still serve 750,000 skiers and snowboarders each season. Print DoneMila Fashions operates three departments: Men's, Women's, and Accessories. Departmental operating income date for the third quarter of 2018 are as follows: BB (Click the icon to view the data.) i (Click the icon to view additional information.) If Mila Fashions drops a department, it will not incur these fixed costs. Under these circumstances, should Mila Fashions drop any of the departments? Give your reasoning. Begin by completing the following analysis to determine the increase or decrease in operating income from dropping the Accessories Department, the only Department showing an operating loss this quarter. (Enter decreases to profits with a parentheses or minus sign.) Mila Fashions i Data Table - X Analysis of Dropping the Accessories Department More Info - X Expected decrease in revenues Expected decrease in costs: Expected decrease in variable costs Mila Fashions Assume that the fixed costs assigned to each department include only direct fixed Income Statement costs of the department: Expected decrease in fixed costs For the Quarter Ended September 30, 2018 Salary of the department's manager Expected decrease in total costs Cost of advertising directly related to that department Department in operating income Men's Women's Accessories Total Print Done Net Sales Revenue S 104,000 S 62,000 S 101,000 S 257,000 84.000 29,000 94,000 Variable Costs 187.000 Contribution Margin 40,000 23,000 7,000 70,000 24.000 Fixed Costs 19.000 17.000 80,000 S 21,000 S 6,000 S (17,000) S 10,000 Operating Income (Loss) Print Done Choose from any list or enter any number in the input fields and then click CheckContainAll produces plastic storage bins for household storage needs. Sales prices and variable costs are as follows: i (Click the icon to view additional information.) (Click the icon to view the costs.) Read the requirements Requirement 1. Which product should ContainAll emphasize? Why? i More Info - X i Requirements - X i Data Table - X The company makes two sizes of bins: large (50 gallon) and regular (35 gallon). 1. Which product should ContainAll emphasize? Why? Demand for the products is so high that ContainAll can sell as many of each size 2. To maximize profits, how many of each size bin should ContainAll produce? as it can produce. The company uses the same machinery to produce both sizes. 3. Given this product mix, what will the company's operating income be? The machinery can only be run for 3,200 hours per period. ContainAll can Regular Large produce 10 large bins every hour, whereas it can produce 15 regular bins in the same amount of time. Fixed costs amount to $125,000 per period. Sales price per unit 8.20 $ 10.70 Print Done Variable costs per unit 3.10 4.70 Print Done Print DoneSuppose Italian Eatery restaurant is considering whether to (1) bake bread for its restaurant in-house or (2) buy the bread from a local bakery. The chef estimates that variable costs of making each loaf include $0.58 of ingredients, $0.18 of variable overhead (electricity to run the oven), and $0.73 of direct labor for kneading and forming the loaves. Allocating fixed overhead (depreciation on the kitchen equipment and building) based on direct labor, Italian Eatery assigns $1.05 of fixed overhead per loaf. None of the fixed costs are avoidable. The local bakery would charge $1.75 per loaf. Read the requirements. Requirements 1. What is the unit cost of making the bread in-house? Complete the following outsourcing decision analysis to determine Italian Eatery's unit cost of making the bread. Italian Eatery Outsourcing Decision Requirements - X Direct material Direct labor Variable overhead 1. What is the full product unit cost of making the bread in-house? 2. Should Italian Eatery bake the bread in-house or buy from the local bakery? Variable cost per unit Why? Plus: Fixed overhead per unit 3. In addition to the financial analysis, what else should Italian Eatery consider when making this decision? Cost per unit Print DoneWands Moody manages a fleet of 350 delivery trucks for Daniels Corporation. Moody performed the following analysis: i (Click the icon to view additional information.) (Click the icon to view the outsourcing decision analysis.) Read the requirements Requirement 1. Which alternative will maximize Daniels's short-term operating income? In order to maximize short-term operating income, Daniels Corporation should More Info - X because the variable cost of outsourcing to FMS results in - X Moody must decide whether the company should outsource the fleet Data Table i Requirements - X management function. If she outsources to Fleet Management Services (FMS), FMS will be responsible for maintenance and scheduling activities. This alternative would require Moody to lay off her five employees. However, her own job would be secure; she would be Daniels's liaison with FMS. If she continues to Outsource To manage the fleet, she will need fleet-management software that costs $8,250 per Retain In-House FMS Difference 1. Which alternative will maximize Daniels's short-term operating income? year to lease. FMS offers to manage this fleet for an annual fee of $385,000. 2. What qualitative factors should Daniels consider before making a final Annual leasing fee for software S 8,250 S 3,250 decision? Annual maintenance of trucks 145,000 145,000 Print Done Total annual salaries of five laid-off employees 185,000 185,000 Print Done S Fleet Management Service's annual fee 385,000 (385,000) S 338,250 S 385,000 S (48,750) Total differential cost of outsourcing Print Done