Alma's Recording Studio rents studio rents studio time to musicians in 2-hour blocks. Each session includes the use of the studio facilities, a digital recording of the performance, and a professional music producer/mixer. Anticipated annual volume is 1,000 sessions. The company has invested $2,352,000 in the studio and expects a return on investment (ROI) of 20%. Budgeted costs for the coming year are as follows.

Per Session Total

Direct Material (CD,etc) $20

Direct Labor $400

Variable overhead $50

Fixed overhead $950,000

Variable selling and administrative expenses $40

Fixed selling and administrative expenses $500,000

Instrutions

(a) Determine the total cost per session

(b) Determine the desired ROI per session

(c) Calculate the markup percentage on the total cost per session.

(d) Calculate the target price per session