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?
A)operate in both the winter and summer
B)operate in the summer, but shut down during the winter
C)operate in the winter, but shut down during the summer
D)go out of business immediately

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?
A)operate in both the winter and summer 
B)operate in the summer, but shut down during the winter 
C)operate in the winter, but shut down during the summer 
D)go out of business immediately

Quizplus · Accepted Answer

Fun Time Inc. should operate in both winter and summer as it has significant profits in both seasons. By shutting down in either season, the company would miss out on potential revenue opportunities. The company can optimize its profits by analyzing the demand for skiing and mountain roller boarding services during each season and adjusting its prices accordingly. Thus, operating in both seasons would lead to the maximum annual profit for Fun Time Inc.