Winter Mountains operates a Rocky Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season.

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Read the requirements.

Requirement $1.$ If Winter Mountains 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 Winter Mountains' projected income.

Revenue at market price

Less: Total costs

Operating income

$($Round the percentage to the nearest hundredth percent, $x.xx\%.)$

Winter Mountains's projected operating income $($profit$)$ as a percent of assets amounts to $\%.$

Will investors be happy with this profit level?

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Requirement $2.$ Assume Winter Mountains has found ways to cut its fixed costs to $$35,000,000.$ What is its new target variable cost per skier$/$snowboarder$?$

Complete the following table to calculate Winter Mountains' 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

Investors would like to earn a $15\%$ return on investment on the company's $$165,000,000$ of assets. Winter Mountains projects fixed costs to be $$36,000,000$ for the ski season. The resort serves about $750,000$ skiers and snowboarders each season. Variable costs are about $$9$ per guest. Last year, due to its favorable reputation, Winter Mountains was a price$-$setter and was able to charge $$5$ more per lift ticket than its competitors without a reduction in the number of customers it received.

Assume that Winter Mountains' reputation has diminished and other resorts in the vicinity are charging only $$85$ per lift ticket. Winter Mountains has become a price$-$taker and will not be able to charge more than its competitors. At the market price, Winter Mountains managers believe they will still serve $750,000$ skiers and snowboarders each season.

Requirements

If Winter Mountains 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?

Assume Winter Mountains has found ways to cut its fixed costs to $$35,000,000.$ What is its new target variable cost per skier$/$snowboarder$?$