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E8-6
Alma's Recording Studio rents studio time to musicians in 2-hour
blocks. Each session includes the use of the studio facilities, a digital
recording of the performance, and a professional music producer/mixer.
Anticipated annual volume is 1,000 sessions. The company has invested
$2,352,000 in the studio and expects a return on investment (ROI) of
20%. Budgeted costs for the coming year are as follows.
a. Determine the total cost per session
b. Determine the desired ROI per session
c. Calculate the markup percentage on the total cost per session.
d. Calculate the target price per session.
E8-9
Rey Custom Electronics (RCE) sells and installs complete security,
computer, audio, and video systems for homes. On newly constructed
homes it provides bids using time and material pricing. The following
budgeted cost data are available.
Time Charges Material
Loading Charges
Technicians' wages and benefits
$150,000
—
Parts manager's salary and benefits
$34,000
Office employee's salary and benefits
15,000
—
30,000