What price should matt charge per rental for the business

Assignment Help Financial Accounting
Reference no: EM13877391

Life-Cycle Pricing Matt Simpson owns and operates Quality Craft Rentals, which offers canoe rent- als and shuttle service on the Nantahala River. Customers can rent canoes at one station, enter the river there, and exit at one of two designated locations to catch a shuttle that returns them to their vehicles at the station they entered. Following are the costs involved in providing this service each year:


Fixed Costs

Variable Costs

Canoe maintenance

$ 2,300

$2.50

Licenses and permits

3,000

0

Vehicle leases

5,400

0

Station lease

6,920

0

Advertising

6,000

0.50

Operating costs

21,000

0.50

Quality Craft Rentals began business three years ago with a $21,000 expenditure for a fleet of 30 canoes. These are expected to last seven more years, at which time a new fleet must be purchased.

Required: Matt is happy with the steady rental average of 6,400 per year. For this number of rentals, what price should he charge per rental for the business to make a 20 percent life-cycle return on investment?

Reference no: EM13877391

Questions Cloud

Summarize history and evolving nature of clinical psychology : Differentiate clinical psychology - Differentiate clinical psychology from other types of psychology. History and Evolving - Summarize the history and evolving nature of clinical psychology
Pick a division of a company : You are to pick a company. You should pick one either from the industry in which you are currently working or an industry in which you are interested. You could also pick a division of a company.  It is imperative to use that sufficient data about yo..
Determine the appropriate life-cycle stage for each activity : Matching Market Characteristics with Sales Life-Cycle Stages. Activities and Market Characteristics. Determine the appropriate life-cycle stage for each activity.
What is the firm''s profit : All firms in a competitive market have the following total cost function TC = 0.5Q2+ 4Q + 120 The market demand and supply functions are given by Qmd = 1700 - 20P , Qms = -100 + 10P where Qmd and Qms are in 100 ..
What price should matt charge per rental for the business : Matt is happy with the steady rental average of 6,400 per year. For this number of rentals, what price should Matt charge per rental for the business to make a 20 percent life-cycle return on investment?
Find the average value : Find the average value of f(x,y)=x2/3y1/3 over the rectangle R={(x,y)/-8≤x≤8,0≤y≤27}
Discuss the methodological issues and challenges : Discuss the methodological issues and challenges that are unique to psychological research investigating effective treatments for psychological disorders
What is the effect on eoq and total cost : What is the effect on EOQ and total cost if there is a 44% increase in carrying charges? (Note that carrying charge change from 10% per year to 20% per year would mean an increase of 100% in carrying charges.)
Obtain value when using a related diversification strategy : Discuss market commonality and resource similarity as the building blocks for competitor analysis and what competitive dynamics can be expected amongst firms that operate in a standard cycle market?

Reviews

Write a Review

Financial Accounting Questions & Answers

  Explain the meaning of integrity

Explain the meaning of 'integrity' and its importance in professional relationships such as those described in the case Key words for integrity

  Prepare a statement of cash flows for paulino corporation

Dividends declared during the year were $41,000 and land at a cost of $125,000 was sold for $140,000 - direct method to prepare a statement of cash flows for Paulino Corporation.

  Calculate the current tax expense

calculate the current tax expense [ Select ] ["262,500", "367,500", "315,000", "420,000"] , deferred tax expense [ Select ] ["52,500", "-52,500", "35,000", "50,000"] and determine the ending deferred tax asset or liability [ Select ] ["17,500 Deferre..

  Prepare the new etching machine an acceptable investment

Prepare the new etching machine an acceptable investment?

  Explain how the accounting equation is impacted

Name the accounts impacted and how using the format account name/debit or credit/dollar amount and (2) explain how the Accounting Equation is impacted.

  Complete the journal entries the company would record

A company sold $18,000 of goods on credit on May 1. At the time of the sale, the company recorded a debit to Accounts Receivable and a credit to Sales Revenue for $18,000. Terms were 2/10, n/30.

  Compare financial position of two companies in same industry

A brief overview of where you (the group) sees the industry is heading, given the information that has come to light in your analysis; additional information provided by the board of directors in the annual reports; and any recent media reports in..

  Create a production budget for february

Create a forecast of the units and cost of raw material that will be required for February, March, and April. The expected cost per pound of raw material is expected to be $2 in February, $2.30 in March, and $2.40 in April.

  Suppose research in motion invested 834 million to expand

suppose research in motion invested 834 million to expand its manufacturing capacity. consider that these assets have a

  Accumulated depreciation—equipment account

Mogilny Company paid $135,000 for a machine. The Accumulated Depreciation—Equipment account has a balance of $46,500 at the present time. The company could sell the machine today for $150,000. The company president believes that the company has a “ri..

  Which company would you select

Assume that high means in the top third of the industry, average means in the middle third and low is in the bottom third. Based on this information, which company would you select? Explain you selection.

  Prepare an income statement for allstar for the past month

Prepare an income statement for Allstar for the past month - Allstar Exposure designs and sells advertising services to small, relatively unknown companies.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd