Cost-Based Pricing and Markups with Variable Costs

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 are available for the year total 20,000, and the average consulting hours has $30 variable costs.

(a) If the company desires a profit of $160,000 what should it charge per hour?

(b) What is the markup on variable costs if the desired profit is $240,000

(c) If the desired profit is $60,000, what is the markup on variable costs to cover

(1) unassigned costs and

(2) desired profit?