SnowParadise operates a Rocky Mountain ski resort. The company is planning its l

Question

SnowParadise 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 12% return on investment on the company's $111,000,000 of assets. The company primarily incurs fixed costs to groom the runs and operate the lifts. SnowParadise projects fixed costs to be $37,000,000 for the ski season. The resort serves about 680,000 skiers and snowboarders each season. Variable costs are about S7 per guest. Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over the lift ticket prices. Read the requirements. Requirement 1. Would SnowParadise emphasize target pricing or cost-plus pricing? Why? SnowParadise should emphasize a from others in the area. Because of its good reputation, managers will have ?| control over pricing. Of course, they still need to consider whether the approach to pricing because it has been able to differentiate its ski resort V price is within the range customers are willing to pay.

Explanation / Answer

1)

a) Cost Plus Target

b) Some

c) Cost Plus Target

2) Cost Plus Price :-

Particulars Amount($) Fixed Cost 37000000 Add : Total Variable Costs (680000*$7) 4760000 Total Costs 41760000 Add : Desired Profit ($111000000*12%) 13320000 Target Revenue 55080000 Divide by 680000 Cost Plus Price Per Lift Ticket 81

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