Cost-plus and market-based pricing. Georgia Temps, a large labor contractor, supplies contract labor to building-construction companies. For 2017, Georgia Temps has budgeted to supply 84,000 hours of contract labor. Its variable costs are $13 per hour, and its fixed costs are $168,000. Roger Mason, the general manager, has proposed a cost-plus approach for pricing labor at full cost plus 20%. Required: 1. Calculate the price per hour that Georgia Temps should charge based on Mason's proposal. 2. The marketing manager supplies the following information on demand levels at different prices: Price per Hour Demand (Hours) $16 124,000 17 104,000 18 84,000 19 74,000 20 61,000 Georgia Temps can meet any of these demand levels. Fixed costs will remain unchanged for all the demand levels. On the basis of this additional information, calculate the price per hour that Georgia Temps should charge to maximize operating income. 3. Comment on your answers to requirements 1 and 2. Why are they the same or different?Cost-plus, target return on investment pricing. Zoom-o-licious makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Zoom-o-licious makes a variety of candy, the cost differences are insignificant, and the cases all sell for the same price. Zoom-o-licious has a total capital investment of $15,000,000. It expects to produce and sell 300,000 cases of candy next year. Zoom-o-licious requires a 10% target return on investment. Expected costs for next year are: Variable production costs $4.00 per case Variable marketing and distribution costs $1.00 per case Fixed production costs $300,000 Fixed marketing and distribution costs $400,000 Other fixed costs $200,000 Zoom-o-licious prices the cases of candy at full cost-plus markup to generate profits equal to the target return on capital. Required: 1. What is the target operating income? 2. What is the selling price Zoom-o-licious needs to charge to earn the target operating income? Calculate the markup percentage on full cost. 3. Zoom-o-licious's closest competitor has just increased its candy case price to $16, although it sells 36 candy bars per case. Zoom-o-licious is considering increasing its selling price to $15 per case. Assuming production and sales decrease by 4%, calculate Zoom-o-licious' return on investment. Is increasing the selling price a good idea