Godfrey Consultancy adopts a cost-plus pricing system for its services and applies a target rate of return of 25% on an investment of $750,000. Its labor costs are $25 per hour, and other variable costs are $4 per hour. The consultancy anticipates charging 20,000 hours per year to clients and has fixed overheads of $250,000. Calculate Godfrey's target selling price per hour.

Godfrey Consultancy adopts a cost-plus pricing system for its services and applies a target rate of return of 25% on an investment of $750,000. Its labor costs are $25 per hour, and other variable costs are $4 per hour. The consultancy anticipates charging 20,000 hours per year to clients and has fixed overheads of $250,000. Calculate Godfrey's target selling price per hour.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 10E: Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22...

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