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Please answer the Requirements according to the form (The numbers are not the same). Please make sure your answer is correct. Thanksss Snow Fanatics operates
Please answer the Requirements according to the form (The numbers are not the same). Please make sure your answer is correct. Thanksss
Snow Fanatics operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. (Click the icon to view the information.) Read the requirements. Requirement 1. If Snow Fanatics cannot reduce its costs, what profit will it earn? State your answer in dollars and as a percent of assets. Will investors be happy with the profit level? Complete the following table to calculate Snow Fanatics' projected income. Revenue at market price Less: Total costs More info Operating income Investors would like to earn a 14% return on investment on the company's $183,750,000 of assets. Snow Fanatics projects fixed costs to be $33,000,000 for the ski season. The resort serves about 725,000 skiers and snowboarders each season. Variable costs are about $13 per guest. Last year, due to its favorable reputation, Snow Fanatics was a price-setter and was able to charge $3 more per lift ticket than its competitors without a reduction in the number of customers it received. Assume that Snow Fanatics' reputation has diminished and other resorts in the vicinity are charging only $91 per lift ticket. Snow Fanatics has become a price-taker and will not be able to charge more than its competitors. At the market price, Snow Fanatics managers believe they will still serve 725,000 skiers and snowboarders each season. Print Done Revenue at market price $ 61,060,000 Less: Total costs 38,520,000 $ 22,540,000 Operating income (Round the percentage to the nearest hundredth percent, X.XX%.) Mount Snows's projected operating income (profit) as a percent of assets amounts to 8.64 % Will investors be happy with this profit level? No, because the expected profit level does not meet the investors' target return on assets. Requirement 2. Assume Mount Snows has found ways to cut its fixed costs to $28,000,000. What is its new target variable cost per skier/snowboarder? Complete the following table to calculate Mount Snows' new target variable cost per customer. (Round your final answer to the nearest cent.) Revenue at market price Less: Desired profit Target full cost $ 61,060,000 26,090,000 $ 34,970,000 Less: Reduced level of fixed costs 28,000,000 Target total variable costs $ 6,970,000 710,000 Divided by number of skiers / snowboarders $ 9.82 Target variable cost per skier / snowboarderStep by Step Solution
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