Question
Novaks Recording Studio rents studio time to musicians in 2-hour blocks. Each session includes the use of the studio facilities, a digital recording of the
Novaks Recording 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 $2,376,000 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 materials (CDs, etc.) | $ 20 | |||||
Direct labor | $400 | |||||
Variable overhead | $ 55 | |||||
Fixed overhead | $950,000 | |||||
Variable selling and administrative expenses | $ 40 | |||||
Fixed selling and administrative expenses | $515,000 |
Determine the total cost per session.
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