SkiLovers operates a Rocky Mountain ski resort. The company is planning itslift-ticket pricing for the coming ski season. Investors would like to earn a 14% return on thecompany's $115

million of assets. The company incurs primarily fixed costs to groom the runs and operate the lifts.

SkiLovers projects fixed costs to be $35,000,000 for the ski season. The resort serves about 975,000

skiers and snowboarders each season. Variable costs are about $13.50 per guest.Currently, the resort has such a favourable reputation among skiers and snowboarders that it has some control over thelift-ticket prices.

FILL IN BLANKS:

1. Would Ski Lovers emphasize target costing or cost-plus pricing? Why? Ski Lovers should emphasize a approach to pricing because it has been able to differentiate its ski resort from others in the area. Because of its favourable reputation, managers will have control over pricing. Of course, they still need to consider whether the price is within the range customers are willing to pay.\fIf other resorts in the area charge $60 per day. what price should Ski Lovers charge? The price is 5|] I competing ski resorts in the area. Given Ski Lovers' favourable reputation, it