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

Operating in both the winter and summer will allow Fun Time to generate revenue for 12 months out of the year, rather than just 6 months with either skiing or mountain roller boarding. By operating year-round, Fun Time can spread its fixed costs (such as property and equipment costs) over a longer period, which can increase profitability. Additionally, the revenue from both activities can offset any potential seasonal fluctuations in demand or unexpected costs.