Winter Sports 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 17% return on the company's $115 million of assets. Th company incurs primarily fixed costs to groom the runs and operate the lifts Winter Sports projects fixed costs to be $44,000,000 for the ski season. The resort serves 775,000 skiers and snowboarders each season Vanable costs are $7 per guest Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over the lift ticket prices 1. Would Winter Sports emphasize target costing or cost-plus pricing Why? 2 If other resorts in the area charge $66 per day, what price should WinterSports charge? 1. Would WinterSports emphasize target costing or cost-plus pricing Why? Winter Sports should emphasize a approach to pricing because it has been able to differentiate its ski resort from others in the area Because of its favorable reputation, managers will have control over pricing Of course, they still need to consider whether the price is within the range customers are willing to pay Y

Winter Sports 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 17% return on the company's $115 million of assets. Th company incurs primarily fixed costs to groom the runs and operate the lifts Winter Sports projects fixed costs to be $44,000,000 for the ski season. The resort serves 775,000 skiers and snowboarders each season Vanable costs are $7 per guest Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over the lift ticket prices 1. Would Winter Sports emphasize target costing or cost-plus pricing Why? 2 If other resorts in the area charge $66 per day, what price should WinterSports charge? 1. Would WinterSports emphasize target costing or cost-plus pricing Why? Winter Sports should emphasize a approach to pricing because it has been able to differentiate its ski resort from others in the area Because of its favorable reputation, managers will have control over pricing Of course, they still need to consider whether the price is within the range customers are willing to pay Y

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 19P

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