Green patsures golf course is planning for the coming season. Investors would li
ID: 2466240 • Letter: G
Question
Green patsures golf course is planning for the coming season. Investors would like to earn a 10% return on the company's $40 million of assets. the company primarly incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $ 15,000,000 for the golfing season. About 400,000 golfers are expected each year. variable costs are about $20 per golfer. The green Patsure golf course has a favorable reputation in the area and therefore, has some control over the price of a round of golf. Using a cost plucing approach, what price should Green Patsure charge for round golf ?
Darren Company has three product lines : D, E and F the following information is available: D E F
D E F
Sales Revenue $70,000 $40,000 $28,000
Variable expenses $40,000 $21,000 $12,000
Contribution margin $30,000 $19,000 $16,000
Fixed expenses $12,000 $15,000 $17,000
perating income ( loss) $18,000 $4,000 $(1,000)
Darren Company is thinking of dropping product line F because it is reporting an operating income loss. All fixed costs are unavoidable. Assuminh Darren company drops line F and is able to double the production and sales of product line E without increasing fixed costs. What affect will this have on operating income? by how much?
Explanation / Answer
Fixed Cost=15,000,000
Total Variable Cost= 8,000,000
Total Cost=23,000,000
Plus Desired Profit=400,000
Target Revenue=23,400,000
Divided by units=400,000
Cost Plus Price per Unit= 58.5 per round of golf
operating income will increase by(24,000-21000)
= $3,000
D E F Total Sales revenue 70000 80000 0 150000 variable expenses 40000 42000 0 82000 contribution margin 30000 38000 0 68000 fixed expenses 12000 15000 17000 44000 operting income 18000 23000 -17000 24000Related Questions
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