Question

SnowParadise 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 10 % return on investment on the​ company's $ 270,000 of assets. The company primarily incurs fixed costs to groom the runs and operate the lifts. SnowParadise projects fixed costs to be $ 31,000 for the ski season. The resort serves about 725,000 skiers and snowboarders each season. Variable costs are about $ 7 per guest.​ Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over the lift ticket prices. Would SnowParadise emphasize target pricing or cost-plus pricing? Why?

Answer 1

Answer and Explanation:

The cost plus pricing refers to the pricing in which the markup percentage is added to the cost of the goods and services the company so that the selling price could be determined

According to the given situation, it is mentioned that the resort have a favorable reputation among skiers which derives that the company products and pricing is different from other company dealing is same type of business. And due to the favorable reputation, the managers have some control over the ticket prices

So it shows the cost plus pricing situation.