Cost-Based Pricing and Markups with Variable Costs Compu Services provides compu
ID: 2414710 • Letter: C
Question
Cost-Based Pricing and Markups with Variable Costs Compu Services provides computerized inventory consulting. The office and computer expenses are $625,000 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 $100,000, what should it charge per hour? Round to the nearest cent.Cost-Based Pricing and Markups with Variable Costs Compu Services provides computerized inventory consulting. The office and computer expenses are $625,000 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 $100,000, what should it charge per hour? Round to the nearest cent.
QUESTION 23 Partially correct Points out of 4.00 Flag question Cost-Based Pricing and Markups with Variable Costs Compu Services provides computerized inventory consulting. The office and computer expenses are $625,000 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 $100,000, what should it charge per hour? Round to the nearest cent. $66.25 (b) What is the markup on variable costs if the desired profit is $150,000? Round to the nearest whole percent. 1130 % (c) If the desired profit is $60,000, what is the markup on variable costs to cover (1) unassigned costs and (2) desired profit? Round to the nearest whole percent. Markup to cover unassigned costs 100 % Markup to cover desired profits 140 % CheckExplanation / Answer
Working for (a)
Calculation of charges per Hour
Variable cost
(20000*30)
600000
Fixed cost
625000
Required Profit
100000
(A) Total value of services
1325000
(B)Number of Hours
20000
(C=A/B)Charges per hour
66.25
(a) The provided answer is correct
Working for (b)
(A) Variable cost
600000
(B) Desired profit with fixed cost
(150000+625000)
775000
(C ) Total Revenue
1375000
Markup on Variable Cost
129.17%
Rounded off
129%
(b) Correct answer would be 129%
Working for (c )
Variable cost
(A)
600000
Unassigned Cost
(B)
625000
Desired Profit
(C )
60000
Total Revenue
(D)
1285000
Markup on Variable cost to cover Unassigned Cost (breakeven sales)
(E=B/A*100)
104.167%
Round off
104%
Markup on Variable cost to cover Unassigned Cost and Desired Profit
(F=(C+B)/A*100)
114.167%
Round off
114%
(c ) Correct answers are
1)Markup to cover Unassigned cost
104%
2)Markup to cover Desired Profit
114%
Working for (a)
Calculation of charges per Hour
Variable cost
(20000*30)
600000
Fixed cost
625000
Required Profit
100000
(A) Total value of services
1325000
(B)Number of Hours
20000
(C=A/B)Charges per hour
66.25
(a) The provided answer is correct
Working for (b)
(A) Variable cost
600000
(B) Desired profit with fixed cost
(150000+625000)
775000
(C ) Total Revenue
1375000
Markup on Variable Cost
129.17%
Rounded off
129%
(b) Correct answer would be 129%
Working for (c )
Variable cost
(A)
600000
Unassigned Cost
(B)
625000
Desired Profit
(C )
60000
Total Revenue
(D)
1285000
Markup on Variable cost to cover Unassigned Cost (breakeven sales)
(E=B/A*100)
104.167%
Round off
104%
Markup on Variable cost to cover Unassigned Cost and Desired Profit
(F=(C+B)/A*100)
114.167%
Round off
114%
(c ) Correct answers are
1)Markup to cover Unassigned cost
104%
2)Markup to cover Desired Profit
114%