Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

question 5 please help Mountain Point operates a Rocky Mountain ski resort. The company is planning its itt ticket pricing for the coming ski season.

question 5 please help
image text in transcribed
image text in transcribed
image text in transcribed
Mountain Point operates a Rocky Mountain ski resort. The company is planning its itt ticket pricing for the coming ski season. Yew the information: Read the requirenknts Roquirement 1. If Mountain Point cannot reduce its costs, what fiafit will it eam? State your answer in dollars and as a percent of assets. Wal investors be happy with itse arefil leven? Complete the following table to calculate Mountain Point's prejected income. Information Investors would like to earn a 15% return on investment on the company's $165,000,000 of assets. The company primarily incurs fixed costs to groom the runs and operate the lifts. Mountain Point projects fixed costs to be $36,000,000 for the ski season. The resort serves about 750,000 skiers and snowboarders each season. Variabletcosts are about $13 per guest. Last year, due to its favorable reputation, Mountain Point was a price-setter and was able to charge $5 more per lift ticket than its competitors without a reduction in the number of customers it received. Assume that Mountain Point's reputation has diminished and other resorts in the vicinity are charging only $89 per lift ticket. Mountain Point has become a price-taker and will not be able to charge more than its competitors. At the market price, Mountain Point managers believe they will still serve 750,000 skiers and snowboarders each season. 1. If Mountain Point 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? 2. Assume Mountain Point has found ways to cut its fixed costs to $34,500,000. What is its new target variable cost per skier/snowboarder

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

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

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

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

Get Started

Students also viewed these Accounting questions

Question

Explain the process of MBO

Answered: 1 week ago