digital recording of the performance, and a professional music producer/mixer. Anticipated annual volume is 1,100 sessions. The company has invested $1,968,340 in the studio and expects a return on investment of 25%. Budgeted costs for the coming year are as follows: Direct materials (tapes, CDs, etc.) Direct labour Variable overhead Fixed overhead Variable selling and administrative expenses Fixed selling and administrative expenses (a) Determine the total cost per session. Total cost per session $ Per Session Total $25 390 50 $1,028,500 50 50 544,500

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Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.