Question
Blue Waters offers swimming lessons. Each lesson lasts approximately 1 hour. The company anticipates 4,000 lessons annually. They have invested $1,000,000 in their facilities and
Blue Waters offers swimming lessons. Each lesson lasts approximately 1 hour. The company anticipates 4,000 lessons annually. They have invested $1,000,000 in their facilities and aim for an ROI of 18%. The budgeted costs for the coming year are shown below:
| Cost Item | Per Lesson ($) | Total ($) |
|---|---|---|
| Direct Materials (Supplies) | 5 | 20,000 |
| Direct Labor (Instructors) | 20 | 80,000 |
| Variable Overhead | 10 | 40,000 |
| Fixed Overhead | - | 180,000 |
| Variable Selling & Admin Expenses | 5 | 20,000 |
| Fixed Selling & Admin Expenses | - | 80,000 |
Required:
- Determine the total cost per lesson.
- Calculate the desired ROI per lesson.
- Compute the target price per lesson.
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Fundamentals of Cost Accounting
Authors: William Lanen, Shannon Anderson, Michael Maher
3rd Edition
9780078025525, 9780077517359, 77517350, 978-0077398194
