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

question 176

Multiple Choice

Use the information below to answer the following question(s) :
Green Pastures golf course is planning for the coming season. Investors would like to earn a 10% return on the company's $40 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $15,000,000 for the golfing season. About 400,000 golfers are expected each year. Variable costs are about $20 per golfer.
-If the Green Pastures golf course is a price-taker and won't be able to charge more than its competitors who charge $75 per round of golf. What profit will it earn in terms of dollars?

• A) $7,000,000
• B) $(7,000,000)
• C) $15,000,000
• D) $(15,000,000)

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Definitions:

Process Cost Accounting System

A method of accounting used to track and allocate costs associated with the production process.

Factory Overhead

All indirect costs involved in manufacturing, excluding direct materials and direct labor; includes items like utilities and salaries for managers.

Equivalent Units

A concept in process costing that represents the amount of work done on incomplete units, expressed in terms of fully completed units.

Direct Labor

Direct labor refers to the wages paid to workers directly involved in the manufacture of products or the provision of services.