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Tony Hawk is planning on opening a new indoor skateboard facility in Athens. He wants to name the skate park Accounting Central because a lot
Tony Hawk is planning on opening a new indoor skateboard facility in Athens. He wants to name the skate park "Accounting Central" because a lot of accountants are skaters as well. Accounting Central will us a membership model to generate revenue, allowing customers to purchase a monthly membership and gain unlimited access to the park. When operating, Accounting Central is estimated to have $ in assets. Shareholders are anticipating receiving a return on the assets as operating income. The facility's annual fixed costs are expected to be $ The variable costs per skater are estimated to be $ per month. After analyzing the market, Accounting Central believes it can sell memberships in the first month. Furthermore, the company has noted that a number of other skaters have started similar skateparks in the area, leading to high competition in the area.
Which of the following statements is incorrect regarding the company's first month of operations assuming a sales price of $ per membership?
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Holding all other variables constant, if the company reduces fixed costs by $ per month, the company will meet its target monthly operating income.
Total monthly target costs for the company are $
Holding all other variables constant, if the company reduces variable costs to $ per skater, the company will meet its target monthly operating income.
Accounting Central is considered to be a price taker in the Athens market.
If the company decided to leave all operations as they currently stand, shareholders would be content with the operating profit achieved.
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