1. Assume that snow delights reputation has diminished and other resorts in the vicinity are only charging $75 per lift ticket snowdelights has become a price-taker and will not be able to charge more than its competitors. At the market price, snowdelight managers believe they will still serve 6,50,000 skiers and snowboarders each season.
Requirements
a.If snowdelight cannot reduce its costs, what profit will it earn? State your answer in dollars and as a percent of assets. Will investors be happy with the profit level?
b.Assume snow delight has found ways to cut its fixed costs to $28 million. What is its new target variable cost per skiers/snowboarder?