8.2-31a Question Help Mountaintop golf course is planning for the coming season.

ID: 2567715 • Letter: 8

Question

8.2-31a Question Help Mountaintop golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $45,000,000 of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $25,000,000 for the gelfing season. About 440,000 golfers are expected each year. Variable costs are about $19 per golfer. The Mountaintop golf course is a price-taker and won't be able to charge more than its competitors who charge S77 per round of golf. What profit will it earn in terms of dollars? OA. $(520,000) OB. $25,000,000) O c. $520,000 O D. $17,240,000

Explanation / Answer

Answer:

profit will it earn in terms of dollar=C ) $ 520,000

Working notes for the answer

As it was given in the question that mountain golf course is price - taker and won't be able to charge more than its competitors who charge $77.00 per round of Gold

So selling price for Mountain golf course is $77

Profit will it earn in terms of dollars is as under

selling price

Less:

variable cost

Contribution margin

Multiplied by

.Total Unit sold

440,000

Total Contribution margin
(58*440,000)

25,520,000

Less: Fixed cost

25,000,000

profit will it earn in terms of dollars

520,000