Business, 16.04.2020 03:33, CHRONICxDJ

Winter Sports Inc. 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 15 % return on the company's $ 100 million of assets. The company incurs primarily fixed costs to groom the runs and operate the lifts. Winter Sports projects fixed costs to be $ 33 comma 750 comma 000 for the ski season. The resort serves about 750 comma 000 skiers and snowboarders each season. Variable costs are $ 10 per guest. The resort had such a favorable reputation among skiers and snowboarders that it had some control over the lift ticket prices. Assume that Winter Sports' reputation has diminished and other resorts in the vicinity are charging only $ 65 per lift ticket. Winter Sports has become a price-taker and won't be able to charge more than its competitors. At the market price, Winter Sports' managers believe they will still serve 750 comma 000 skiers and snowboarders each season. Requirements 1. would Mountain Point emphasize target pricing or cost-plus pricing? Why? Mountain Point should emphasize a cost-plus target approach to pricing because it has been able to differentiate its ski resort from others in the area. Because of its good reputation, managers will have No some control over pricing. Of course, they still need to consider whether the Cost-plus target price is within the range customers are willing to pay.

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Winter Sports Inc. operates a Rocky Mountain ski resort. The company is planning its lift ticket pri...