Cost-Based Pricing and Markups with Variable Costs (LO2)

Compu Services provides computerized inventory consulting. The office and computer expenses are

$600,000 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.

Required

a. If the company desires a profit of $80,000, what should it charge per hour?

b. | What is the markup on variable costs if the desired profit is $120,000?

c. If the desired profit is $60,000, what is the markup on variable costs to cover (1) unassigned costs and (2) desired profit?

 LO.1