Mount Snow operates a Rocky Mountain ski resort. The company 1 answer below »
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Mount Snow 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 16% return on the company’s $109,375,000 of assets. The company primarily incurs fixed costs to groom the runs and operate the lifts. Mount Snow projects fixed costs to be $35,000,000 for the ski season. The resort serves about 700,000 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.
Requirements
1. Would Mount Snow emphasize target pricing or cost-plus pricing. Why?
2. If other resorts in the area charge $83 per day, what price should Mount Snow charge?
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