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

question 181

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.
-Using a cost-plus approach, what price should Rosemont Tennis charge for an hour of court time?

• A) $33.00
• B) $36.00
• C) $24.00
• D) $0.20

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