Winter Sports Inc. 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 the company's $100 million of assets. The company incurs primarily fixed costs to groom the runs and operate the lifts. Winter Sports projects fixed costs to be $33,750,000 for the ski season. The resort serves 750,000 skiers and snowboarders each season. Variable costs are $10 per guest. The resort had such a favorable reputation among skiers and snowboarders that it had some control over the lift ticket prices. Assume that Winter Sports' reputation has diminished and other resorts in the vicinity are charging only 565 per lift ticket. Winter Sports has become a price-taker and won't be able to charge more than its competitors. At the market price, Winter Sports' managers believe they will still serve 750,000 skiers and snowboarders each season. Read the requirements Revenue at market price 48750000 Less: Total costs 41250000 Operating income 7500000 15000000 Compared to the desired operating income of -7500000 Expected excess profit (profit shortfall) (Round the percentage to the nearest hundredth percent, X.XX%.) As a percentage of assets, Winter Sports' projected profit is 7.5%. Will investors be happy with this profit level? Stock prices 2. Assume that Winter Sports has found ways to cut its fixed costs to $30 million. What is its new target variable cost per skier/snowboarder? Assume investors want to earn a 15% return on assets. Compare this to the current variable cost per skier/snowboarder. Comment on your results. Complete the following table to calculate Winter Sports' 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. Winter Sports V this target since it is the current variable cost. Activate Windows