Skiable Acres 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 12% return on investment on the company's $111,000,000 of assets. Skiable Acres projects fixed costs to be $37,000,000 for the ski season. The resort serves about 680,000 skiers and snowboarders each season. Variable costs are about $13 per guest. Last year, due to its favorable reputation, Skiable Acres was a price-setter and was able to charge $4 more per lift ticket than its competitors without a reduction in the number of customers it received. Assume that Skiable Acres' reputation has diminished and other resorts in the vicinity are charging only $83 per lift ticket. Skiable Acres has become a price-taker and will not be able to charge more than its competitors. At the market price, Skiable Acres managers believe they will still serve 680,000 skiers and snowboarders each season.

(Click the icon to view the information.)Read the requirements

Part 1

Requirement 1.If Skiable Acres 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

Skiable Acres' projected income.

Revenue at market price ??
Less: Total costs ??
Operating income ??

Part 2

(Round the percentage to the nearest hundredth percent, X.XX%.)

Skiable Acres's projected operating income (profit) as a percent of assets amounts to

%.

Part 3

Will investors be happy with this profit level?

Part 4

Requirement 2. Assume

Skiable Acres

has found ways to cut its fixed costs to

$35,500,000.

What is its new target variable cost per skier/snowboarder? Complete the following table to calculate

Skiable Acres'

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

Revenue at market price	??
Less: Desired profit	??
Target full cost	??
Less: Reduced level of fixed costs	??
Target total variable costs	??
Divided by number of skiers / snowboarders	??
Target variable cost per skier / snowboarder ??