Cost-Based Pricing and Markups with Variable Costs Compu Services provides computerized inventory consulting. The office and computer expenses are $600,000 annually and are not assigned to specific jobs. The consulting hours available for the year total 20,000, and the average consulting hour has $30 of variable costs. (a) If the company desires a profit of $180,000, what should it charge per hour? $Answer (b) What is the markup on variable costs if the desired profit is $120,000?
Cost-Based Pricing
and Markups with Variable Costs
Compu Services provides computerized inventory consulting. The office and computer expenses are $600,000 annually and are not assigned to specific jobs. The consulting hours available for the year total 20,000, and the average consulting hour has $30 of variable costs.
(a) If the company desires a profit of $180,000, what should it charge per hour?
$Answer
(b) What is the markup on variable costs if the desired profit is $120,000?
Answer
%
(c) If the desired profit is $180,000, what is the markup on variable costs to cover (1) unassigned costs and (2) desired profit?
Markup to cover unassigned costs Answer
%
Markup to cover desired profits Answer
%
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