Fun Time Inc.uses the same property and equipment to provide skiing services for six months during the winter and mountain roller boarding for six months during the summer.Monthly revenue and cost figures during the summer and winter months for Fun Time are shown below.Fun Time's $1,000 monthly fixed costs will be incurred as long as it remains in business.

Which of the following should Fun Time do if it wants to maximize its annual profit?

Question

Fun Time Inc.uses the same property and equipment to provide skiing services for six months during the winter and mountain roller boarding for six months during the summer.Monthly revenue and cost figures during the summer and winter months for Fun Time are shown below.Fun Time's $1,000 monthly fixed costs will be incurred as long as it remains in business.

Which of the following should Fun Time do if it wants to maximize its annual profit?

Quizplus · Accepted Answer

Fun Time Inc. has monthly revenue and cost figures for both winter and summer months. By operating in both seasons, the company can generate revenue for 12 months instead of just 6 months. This will help the company to cover its fixed costs and generate additional profits.

If the company shuts down during one season, it will have no revenue during that time and still incur monthly fixed costs of $1,000. Hence, operating in both seasons is the best choice to maximize annual profit.