Business
03.02.2023 00:44
236
301
6
Solved by an expert
WinterDreams operates a Rocky Mountain ski resort. The company is planning its lift
WinterDreams 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 $ 115 million of assets. The company incurs primarily fixed costs to groom the runs and operate the lifts. WinterDreams projects fixed costs to be $ 35 comma 600 comma 000 for the ski season. The resort serves 800 comma 000 skiers and snowboarders each season. Variable costs are $ 8 per guest. Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over the lift ticket prices.
Required:
a. Would Mountain Point emphasize target pricing or cost-plus pricing? Why?
b. If other resorts in the area charge $66 per day, what price should Mount Snow charge?
Show Answers
a. Would Mountain Point emphasize target pricing or cost-plus pricing? Why?
b. If other resorts in the area charge $66 per day, what price should Mount Snow charge?
maddyr04
4,9(92 marks)
a. Would Mountain Point emphasize target pricing or cost-plus pricing? Why?
They emphasize cost plus pricing because the investors are seeking a desired rate of return on their investment and they do it by adding the desired profit margin to their costs.b. If other resorts in the area charge $66 per day, what price should Mount Snow charge?
$75.50 in order for them to generate the required ROI. Since the resort has a very good reputation, it can charge a higher price than its competitors.Explanation:
company's assets = $115,000,000
expected return on investment = 16%
fixed costs = $35,600,000
number of customers = 800,000
variable costs = $8 per customer x 800,000 = $6,400,000
total costs = $42,000,000
total cost per client = $42,000,000 / 800,000 = $52.50
desired profit = $115,000,000 x 16% = $18,400,000
desired profit per client = $18,400,000 / 800,000 = $23
price per ticket = $75.50
hughesnatalia2003
4,5(81 marks)
answer; common market;
Popular Questions about the subject: Business
What is does it mean to be financially illiterate...
Business
31.10.2022 17:40
What percentage of millionaires started with nothing?...
Business
08.09.2021 22:57
Other things equal, relatively poor countries tend to grow group...
Business
24.09.2022 01:18
Real gdp per capita in the u.s. grew from about $6,000 in the...
Business
10.11.2021 00:25
Austin s total fixed cost is $3,600. austin employs 20 workers...
Business
29.01.2021 03:54
What index is used to measure the average prices paid by a typical...
Business
05.10.2021 15:11
Plan production for a four-month period (february through may)....
Business
02.11.2022 19:55
On january 1, garcia supply leased a truck for a five-year period,...
Business
11.06.2022 21:46
Many policymakers is developing countries have proposed implementing...
Business
08.06.2020 20:03
An outside supplier has offered to sell 17,000 units of part s-6...
Business
16.06.2021 03:37
New questions by subject
22)identify one piece of evidence that led astronomers to infer...
Physics
02.01.2020 06:27
Auniversity is trying to determine what price to charge for tickets...
Mathematics
16.07.2020 13:00
In what organizational pattern do you move back and forth between...
English
10.07.2020 08:09
Police can estimate the speed of a vehicle before the brakes are...
Mathematics
21.10.2022 15:01
What provides storage for water, nutrients, poisons?...
Biology
31.05.2021 00:54
Prescribing for women during their childbearing years requires...
Biology
17.05.2022 06:21
One of the provisions of the missouri compromise is that was abolished...
History
03.11.2022 01:29
Paul and jose are trying to measure the height of a tree. paul...
Mathematics
06.03.2022 07:10
What does agosto and maggio mean in italian...
World Languages
31.08.2022 09:50
Why shall we reward our distinguished employees in uae...
Social Studies
08.12.2021 11:09
Find out answers to questions
from an AI-bot
from an AI-bot
Get full access
Answers
