Solving for cost-based selling price. Total Body Spa follows a cost-based approach to pricing. It sets prices equal to 1 10 percent of cost. The spa has annual fixed costs of

$300,000. The variable costs of the spa services follow:

The spa expects to provide 1,000 type A treatments, 4,000 type B treatments, and 1 ,000 type C treatments.

a. Compute the price of each treatment if the spa allocates fixed costs to services on the basis of the number of treatments.

b. Compute the selling price of each treatment if the spa allocates fixed costs to treatments on the basis of total variable costs.

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Treatment Type A B C Variable Cost per Procedure $10 20 30