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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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