Hilltop Golf Course Is Planning for the Coming Season

Hilltop Golf Course is planning for the coming season. Investors would like to earn a 15% return on the company's $60,000,000 of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $30,000,000 for the golfing season. About 600,000 rounds of golf are expected to be played each year. Variable costs are about $15 per round of golf. Hilltop golf course has a favorable reputation in the area and therefore, has some control over the price of a round of golf. Using a cost-plus pricing approach, what price should Hilltop charge for a round of golf to achieve the desired profit?

A) $50
B) $60
C) $70
D) $80

Correct Answer:

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