Snow Lovers 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 16% return on the company's $110 million of assets. The company incurs primarily fixed costs to groom the runs and operate the lifts. Snow Lovers projects fixed costs to be $33,300,000 for the ski season. The resort serves about 740,000 skiers and snowboarders each season. Variable costs are about 10 per guest. Currently, the resort had such a favourable reputation among skiers and snowboarders that it had some control over the lift-ticket prices. Assume that Snow Lovers' reputation has diminished and other resorts in the vicinity are charging only $68 per lift ticket. Snow Lovers has become a price-taker and won't be able to charge more than its competitors. At the market price, Snow Lovers managers believe they will still serve 740,000 skiers and snowboarders each season. Requirements X 1. If Snow Lovers can't 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? Show your analysis. Requirements Complete the following table to calculate Snow Lovers' projected income and excess profit or shortfall. (Use parentheses or a minus sign to show a profit shortfall.) Revenue at market price 50320000 1. If Snow Lovers can't 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? Show your Less: Total costs 40700000 analysis Operating income 2. Assume that Snow Lovers has found ways to cut its fixed costs to $29 million. What is its new target variable cost per skier/snowboarder? Compare this to the current variable Compared to the desired operating income of cost per skier/snowboarder. Comment on your results. Expected excess profit (profit shortfall) As a percentage of assets, Snow Lovers's projected profit is | %. (Round the percentage to two decimal places, X.XX.) Print Done Will investors be happy with this profit level? Share prices 2. Assume that Snow Lovers has found ways to cut its fixed costs to $29 million. What is its new target variable cost per skier/snowboarder? Compare this to the current variable cost per skier/snowboarder. Comment on your results. Complete the following table to calculate Snow Lovers' new target variable cost per customer. (Round your final answer to the nearest cent.) Less:Assume that Snow Lovers' reputation has diminished and other resorts in the vicinity are charging only $68 per lift ticket. Snow Lovers has become a price-taker and won't be able to charge more than its competitors. At the market price, Snow Lovers managers believe they will still serve 740,0OU skiers and snowboarders each season. Requirements X Requirements 1. If Snow Lovers can't 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? Show your analysis. Operating income 2. Assume that Snow Lovers has found ways to cut its fixed costs to $29 million. What is Compared to the desired operating income of its new target variable cost per skier/snowboarder? Compare this to the current variable cost per skier/snowboarder. Comment on your results. Expected excess profit (profit shortfall) As a percentage of assets, Snow Lovers's projected profit is | %. (Round the percentage to two decimal places, X.XX.) Will investors be happy with this profit level? Print Done Share prices 2. Assume that Snow Lovers has found ways to cut its fixed costs to $29 million. What is its new target variable cost per skier/snowboarder? Compare this to the current variable cost per skier/snowboarder. Comment on your results. Complete the following table to calculate Snow Lovers' new target variable cost per customer. (Round your final answer to the nearest cent.) Less Less: Target total variable costs Divided by: Target variable cost per skier / snowboarder This target variable cost is the current variable cost of 10. Snow Lovers this target since it is the current variable cost