Question
Elite Chauffeur Services provides luxury car rentals. Each rental lasts approximately 4 hours. The company anticipates 1,200 rentals annually. They have invested $1,200,000 in their
Elite Chauffeur Services provides luxury car rentals. Each rental lasts approximately 4 hours. The company anticipates 1,200 rentals annually. They have invested $1,200,000 in their facilities and aim for an ROI of 22%. The budgeted costs for the coming year are shown below:
| Cost Item | Per Rental ($) | Total ($) |
|---|---|---|
| Direct Materials (Fuel, etc.) | 20 | 24,000 |
| Direct Labor (Drivers) | 50 | 60,000 |
| Variable Overhead | 15 | 18,000 |
| Fixed Overhead | - | 264,000 |
| Variable Selling & Admin Expenses | 10 | 12,000 |
| Fixed Selling & Admin Expenses | - | 84,000 |
Required:
- Determine the total cost per rental.
- Calculate the desired ROI per rental.
- Compute the target price per rental.
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Financial Reporting Financial Statement Analysis And Valuation A Strategic Perspective
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
9th Edition
1337614689, 1337614688, 9781337668262, 978-1337614689
