Answer:
$(18,900)
Explanation:
Calculation to determine what the elimination of the West Division would result in an overall company net operating income (loss)
Using this formula
Net operating income (loss) = Net operating income of East division -Allocated common cost to West division
Let plug in the formula
Net operating income (loss)= $ 89,600 - $108,500
Net operating income (loss)= $(18,900)
Therefore the elimination of the West Division would result in an overall company net operating income (loss) of $(18,900)
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Based on the fact that Snowpeak Ski Resort offers prices for lifts that are barely over their marginal cost but still make profits from high equipment rental, the pricing strategy in use is Cross-subsidization.
<h3>What is Cross-subsidization?</h3>
This is a pricing strategy that allows a company to charge one group of customers a higher amount for goods sold or services rendered while charging another group of customers a lower amount for other goods and services.
The logic is that the profits from the higher priced goods will take care of the marginal profits from the smaller cost goods and services.
Companies do this because they know that there are services that they can offer that will be easier to sell to people at a higher cost than a lower one. This is what Snowpeak Ski Resort is doing by using the rental fee of equipment to make profits.
Find out more on Cross-subsidization at brainly.com/question/6886629
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Answer:
d. $13.00
Explanation:
contributon margin = selling price - variable cost
sales price: $25 per unit
<u>list of variable cost:</u>
Direct mateirals 6.20
Direct labor 2.80
variable overhead 1.45
sales commisions 1.00
adminsitrative variable<u> 0.55 </u>
total variable cost 12.00
$25 selling price per unit - $12 variable cost per unit =
$13 contribution margin per unit
This is the amount each units "contributes" to ay the fixed cost and make a gain during the period.
