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 20 % return on the company's $ 110 million of assets. The company incurs primarily fixed costs to groom the runs and operate the lifts. WinterParadises projects fixed costs to be $ 38 comma 200 comma 000 for the ski season. The resort serves 875 comma 000 skiers and snowboarders each season. Variable costs are $ 9 per guest. Currently, the resort has such a favorable reputation among skiers and snowboarders that it has some control over the lift ticket prices.
1. Would WinterParadises emphasize target costing or cost-plus pricing. Why?
2. If other resorts in the area charge $ 58 per day, what price should WinterParadises charge?
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