Hilltop Golf Course Is Planning for the Coming Golfing Season

question 21

Multiple Choice

Hilltop Golf Course is planning for the coming golfing season.Investors would like to earn a 10% return on the company's $50,000,000 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 season.About 600,000 rounds of golf are expected to be played each year.Variable costs are about $16 per round of golf.Hilltop golf course has a favorable reputation in the area and,therefore,has some control over the sales price of a round of golf.Using a cost-plus pricing approach,what sales price should Hilltop charge for a round of golf to achieve the desired profit?

• A) $50
• B) $66
• C) $34
• D) $74

---

Definitions:

Intangible Asset

An asset that lacks physical substance and is not financial in nature, which is identifiable and provides economic benefits or advantages to the owner.

Trademark

A symbol, word, or phrase legally registered or established by use as representing a company or product.

Amortized

The process of gradually reducing the cost of an intangible asset or paying off a debt over a period.

Legal Fees

Charges for legal services provided by attorneys or law firms.