Need help with requirement #2 WinterParadise operates a Rocky Mountain ski resor

ID: 2554032 • Letter: N

Question

Need help with requirement #2 WinterParadise operates a Rocky Mountain ski resort The company ?? planning its r tcket pricing for re con ng ski season investors would ke o earn a 1% return on the company's $115 mlion of assets The company incurs primanly tixed costs to groom the runs and operate the lifts. WinterParadise projects fixed costs to be $44,000,000 for the ski season. The resort serves about 775,000 skiers and snowboarders each season Vanable costs are $7 per guest. The resort had such a favorable reputation among skiers and snowboarders that it had some control over the ift ticket prices Assume that WinterParadise's reputation has diminished and other resorts in the vicinity are charging only $66 per lift ticket WinterParadise has become a price-taker and wont be able to chargo more than its competitors. At the market price, WinterParadise's managers believe they will still serve 775,000 skiers and snowboarders each season Read the requirements 1,1' Winte Paradise can't reduce its costs, what profit will it earn? State your answer n dollars and as a percent of assets. wn investors be happy with the profit level? Show your analysis or shortfall Se parentheses ora m nus sign to show a pro Complete the following table to calculate WinterParadise's projected in orne and excess pro shortfall ) S 51150,000 40 425,000 Revenue at market prico Less Total costs Operating incomo 1725.000 owo S (17 825,000) Expected excess profit (profit shortall) (Round the percentage to the nearest hurd'odth percent x xx% ) As a percontage of assets, WintorParadise's projected profit is Choose from any list or enter any number in the input frelds and then click Check Answer

Explanation / Answer

Answer:

Revenue at current market price
(775000*66)

51,150,000

Less: desired profit
(115,000,000*17%)

19,550,000

Targeted total cost

31,600,000

less: Fixed cost (cut down cost)

28,500,000

New total variable cost (A)

3,100,000

Divided by number of Skiers

775,000

New variable cost per unit