Bramble's Recording Studio rents studio time to musicians in 2-hour blocks. Each session includes the use of the studio facilities, adigital recording of the performance, and a professional music producer/mixer. Anticipated annual volume is 1,140 sessions. Thecompany has invested $2,346,120 in the studio and expects a return on investment (ROI) of 20%. Budgeted costs for the coming yearare as follows.PerTotalSessionDirect materials (CDs, etc.)$20Direct labor$405Variable overhead$45Fixed overhead$1,077,300Variable selling and administrative expenses$40Fixed selling and administrative expenses$575,700

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Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter12: Activity-based Management

Section: Chapter Questions

Problem 4CE: Foy Company has a welding activity and wants to develop a flexible budget formula for the activity....

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Wildhorse's Recording Studio rents studio time to musicians in two-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 1,400 sessions. The company has invested $2,212,000 in the studio and expects a return on investment of 20%. Budgeted costs for the coming year are as follows: (a) Per Session Total Direct materials (tapes, CDs, etc.) $20 Direct labour 400 Variable overhead 45 Fixed overhead $1,330,000 Variable selling and administrative expenses 40 Fixed selling and administrative expenses 728,000 Your answer is correct. Determine the total cost per session. Total cost per session $ 1975 SUPPOR
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Create a budget for the following project: Blazer Company plans on purchasing new equipment to retool its manufacturing process. The project will involve the acquisition of equipment, installation of the new equipment, selling off the old equipment and training the workforce on the new equipment and processes. Blazer expects this project to take two years from beginning to end. Costs and expected income for the project are as shown below. Your task is to create a two-year cash budget for the project and compute a return on investment (ROI) for the project. You may ignore the time value of money in your calculation. You may make reasonable assumptions to complete this problem so long as you document them. Facts: a. The equipment to be purchased will cost $455,000. The equipment will be purchased and paid for at the beginning of Year 1. b. Installation cost will be $55,000. c. Blazer will purchase a maintenance contract for the equipment. The first year of maintenance is included in the…
Finance

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