Hilltop Golf Course is planning for the coming golfing season.Investors would like to earn a 15% return on the company's $60,000,000 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 $15 per round of golf.Hilltop golf course is a price-taker and will not be able to charge more than its competitors,who charge $75 per round of golf.What profit will it earn in terms of dollars?

Question

Quizplus · Accepted Answer

To calculate the profit, we need to find the total revenue generated and then subtract the total variable and fixed costs from it. 
Total revenue = Price per round of golf x Number of rounds of golf played
= $75 x 600,000
= $45,000,000
Total variable costs = Variable cost per round of golf x Number of rounds of golf played
= $15 x 600,000
= $9,000,000
Total fixed costs = $30,000,000
Therefore, total costs = $9,000,000 + $30,000,000
= $39,000,000
Profit = Total revenue - Total costs
= $45,000,000 - $39,000,000
= $6,000,000
Hence, the answer is A) $6,000,000.

Hilltop Golf Course Is Planning for the Coming Golfing Season