n groo Snow Dreams per es a Rocky Mountain sk resan he r mpany is planning ts li
ID: 2592450 • Letter: N
Question
n groo Snow Dreams per es a Rocky Mountain sk resan he r mpany is planning ts lit t et priring r the r m ng ski season n esto would like 1n earn a 1 % retirn on lhe c mpan $1 10 million o sets he company ncurs primari fixed costs 1n grnnm he runs and operate the itts SnowDreams projects toxed costs to be s3200 for the ski season. The resorn serves 830is and snowbosrders each season Variable costs are $12 perguest Cumenty the resort has such a favcrable reputation among skiers and snowboarders that it has some control over the lift ticket prices 1. Would Snowbreams emphasize target costing or cost-plus pricing Why 2. t ather resorts in the area charge sc per dey whst pice should Snowbreams charge 1. Woud SowDreams cmphas ze target costingocost-plus pricing. Why? SnowDreams should emphasize a consider whether the approach to pricing because i has been able o di er en ate lts ski resor rom others n he area ecause o its favorable reputation, mena ers w have control overpricing. O course they su to ne | pnce is within the range customers are willing to pay 2. If other resorts in the area charge 560 per day, what price shouki SnowDreams charge? Complete the following table to calculate the price SnowDreams should charge. (Round your answer to the nearest cent) Plus Plus Target revenue Divided by Price per ift ticket If other resorts in tho arca cnargc $60 pcr day, what pricc should SnowDrcams charge?Explanation / Answer
Note-Question is not clearly readable the student are requested to varify the figure below, before refer to the answar
Required rate of return = 19%
Value of Assets=$110 milian
Fixed cost= $ 37200000.
Resort Serve 830000
Variable cost = $ 12 per Guest.
Answar 1)Snow dream should emphasize a cost-plus approch to pricing because it has been able to differenciate its ski resort from other in the area .Because its favrouable reputation ,Manager will have some control over pricing.
Ofcource they still need to consider whether the cost-plus price is whithin the range customers are willin.g to pay.
2)
Working -Calulation
Desired profit = Value of Assets x requried rate of return.
= $ 110000000 x 19%
= $ 20900000
Total Variable Cost = Variable cost per Guest x Number of Guest
= $12 x 830000
= $ 9960000
Variable Cost 9960000 Plus : Fixed Cost 37200000 Total Cost 47160000 Plus : Desired Profit- 20900000 Target Revenue 68060000 Devided by number of Skires and snowboarder 830000 Cost plus price per lift ticket 82
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