Answered: If other resorts in the area charge…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

BlancFace operates an Adirondack Mountain ski resort. The company is planning its lift ticket pricing for the coming ski season. Investors would like to earn a 15% return on investment on the company's $257,020,000 of assets. The company primarily incurs fixed costs to groom the runs and operate the lifts. BlancFace projects fixed costs to be $30,150,000 for the ski season. The resort serves about 691,000 skiers and snowboarders each season. Variable costs are about $12 per guest. Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over the lift ticket prices.

If other resorts in the area charge $106 per day, what price should BlancFace charge? Round the final lift ticket price to the nearest dollar.

BlancFace

Fixed Costs
Plus: Total Variable Costs
TOTAL COSTS
Plus: Desired Profit
TARGET REVENUE
Divided by: Numbers of skiers/snowboarders
PRICE PER LIFT TICKET

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