Alma's Recording Studio rents studio time to musicians in 2-hours 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. Per Session Total Direct materials (CDs, etc.) $20 Direct labor $400 Variable overhead $50 Fixed overhead $950,000 Variable selling and administrative expenses $40 Fixed selling and administrative expenses $500,000 a. Determine the total cost per session. b. Determine the desired ROI per session.
Alma's Recording Studio rents studio time to musicians in 2-hours 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
Per Session Total
Direct materials (CDs, etc.) $20
Direct labor $400
Variable
Fixed overhead $950,000
Variable selling and administrative expenses $40
Fixed selling and administrative expenses $500,000
a. Determine the total cost per session.
b. Determine the desired ROI per session.
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