SnowCastle 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 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. SnowCastle projects fixed costs to be $36,000,000 for the ski season. The resort serves about 750,000 skiers and snowboarders each season. Variable costs are about $9 per guest. Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over the lift ticket prices. Read the requirements. Requirement 1. Would SnowCastle emphasize target pricing or cost-plus pricing? Why? SnowCastle should emphasize a cost-plus approach to pricing because it has been able to differentiate its ski resort from others in the area. Because of its good reputation, managers will have some control over pricing. Of course, they still need to consider whether the cost-plus price is within the range customers are willing to pay. Requirement 2. If other resorts in the area charge $89 per day, what price should SnowCastle charge? i Requirements Complete the following table to calculate the price SnowCastle should charge per lift ticket. Fixed costs Plus: Total variable costs Total costs Plus: Desired profit Number of skiers / snowboarders Divided by: Price per lift ticket Target revenue 1. Would SnowCastle emphasize target pricing or cost-plus pricing? Why? - X 2. If other resorts in the area charge $89 per day, what price should SnowCastle charge? Print Done