Use the Information Below to Answer the Following Question(s)

question 157

Multiple Choice

Use the information below to answer the following question(s) :
Rosemont Tennis is planning for the coming year. Investors would like to earn a 12% return on the company's $25 million of assets. The company primarily incurs fixed costs to maintain the tennis courts. Fixed costs are projected to be $12,500,000 for the year. About 500,000 court time hours are expected to be played each year. Variable costs are about $5 per hour of court time.
-If Rosemont Tennis is a price-taker and won't be able to charge more than its competitors who charge $32.50 per hour of court time. What profit will it earn as a percent of assets?

• A) Profit of 25%
• B) Loss of 5%
• C) Loss of 25%
• D) Profit of 5%

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Definitions:

Larger Organization

Refers to a business or entity that operates on a significant scale, having extensive reach, resources, personnel, and complexity.

Classical Approach

A theory of management that emphasizes a structured, formal organization and the importance of efficiency and productivity.

Scientific Management

A theory of management that analyzes and synthesizes workflows to improve economic efficiency, especially labor productivity.

Bureaucratic Organization

A structured and formal organization where rules, hierarchical structure, and detailed procedures guide operations and decision-making.