Question
Mountain Point operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. Investors would like to
Mountain Point 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 investment on the company's $148,500,000 of assets. The company primarily incurs fixed costs to groom the runs and operate the lifts. Mountain Point projects fixed costs to be $35,000,000 for the ski season. The resort serves about 725,000 skiers and snowboarders each season. Variable costs are about $8 per guest. Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over the lift ticket prices.
Requirement 2. If other resorts in the area charge $86 per day, what price should Mountain Point charge? Complete the following table to calculate the price Mountain Point should charge per lift ticket.
| Fixed costs | |||
| Plus: | Total variable costs |
| |
| Total costs |
| ||
| Plus: | Desired profit |
| |
| Target revenue |
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| Divided by: | Number of skiers / snowboarders |
| |
| Price per lift ticket: |
| ||
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Managerial Accounting Information For Decisions
Authors: Thomas L. Albright , Robert W. Ingram, John S. Hill
4th Edition
0324222432, 978-0324222432
