60.1K

Verified Solution

Link Copied!

Reach the Summit, Inc. is planning to open a new rock climbing facility in Athens. Summit will generate revenue by selling monthly memberships that give climbers unlimited access to the facility. The facility will have an estimated $360,000 in assets. The owners expect to earn a 15% annual return on the company's assets. The facility's annual fixed costs are estimated to be $12,000. The variable costs per climber are estimated to be $12 per month. After researching the market, the company believes that it can sell 80 memberships in its first month of operations if it does not require an initial signup fee. Summit can only charge $80 per month for a membership because of competition from another facility in the area. Which of the following statements is incorrect regarding the company's first month of operations? O A. Holding all other variables constant, if the company reduces variable costs by $0.75 per member, the company would meet its monthly target profit. OB. The total monthly target costs for the company is $1,900. O C. Reach the Summit is considered a price taker in its current market. O D. If fixed costs are reduced to $940 per month and all other variables remain constant, the company would meet its monthly target profit O E. If it makes no changes to its projected operations, the company will fall short of its monthly target profit by $1,900

Answer & Explanation Solved by verified expert

See Answer