E8.6 (LO 2), AP Service 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. Instructions Direct materials (CDs, etc.) Direct labor Variable overhead Fixed overhead Variable selling and administrative expenses Fixed selling and administrative expenses 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. Per Session $20 400 50 40 Total $950,000 500,000

E8.6 (LO 2), AP Service 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. Instructions Direct materials (CDs, etc.) Direct labor Variable overhead Fixed overhead Variable selling and administrative expenses Fixed selling and administrative expenses 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. Per Session $20 400 50 40 Total $950,000 500,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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