Cost-Based Pricing and Markups with Variable Costs Compu Services provides compu

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.

Also 39618 is incorrect. Thank you!

Incorrect Points out of 1.00 Flag question NPV: Taxes and Accelerated Depreciation Assume that United Technologies is evaluating a proposal to change the company's manual design system to a computer-aided design (CAD) system. The proposed system is expected to save 9,000 design hours per year; an operating cost savings of $45 per hour. The annual cash expenditures of operating the CAD system are estimated to be $200,000. The CAD system requires an initial investment of $550,000. The estimated life of this system is five years with no salvage value. The tax rate is 35 percent. United Technologies has a cost of capital of 14 percent. Assume that management intends to use double-declining balance depreciation with a switch to straight-line depreciation (applied to any under depreciated balance) starting in Year 4. Determine the project's net present value. Round your answer to the nearest dollar. $52,368 Check

Explanation / Answer

a. Total Cont = No of Hrs*Cont per hr Reqd Profit = Total Contribution - Fixed costs = 20,000*Cont per hr – 625,000 = 100,000 So Cont per hr = (100,000 + 625,000)/20,000 = 725,000/20,000 = $36.25 Cont per Hr = Charges per Hr – Var cost per her So Charges per hr = Cont per Hr + Var cost per hr = 36.25+ 30 = $66.25 So for Profit of $100,000, Charge per hr should be $66.25

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