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on the assets invested. Macquarium has invested $ 9 . 6 million since its opening. The annual costs for the coming year are expected to
on the assets invested. Macquarium has invested $ million since its opening. The annual costs for the coming year are expected to be as
The two services expend about equal costs per hour, and the predicted hours for the coming year are for WPD and for ICS.
Required
Hint: Start by determining the markup rate.
b If the markup is based on total costs, how much revenue must each service generate to provide the expected profit?
WPD Revenue: $
ICS Revenue: $
c What is total revenue for part a and total revenue for part b
Total revenue for a: $
Total revenue for b:
d Label each of the following as an advantage or disadvantage of using a costbased pricing model.
Relatively easy and convenient
Based on cost data which may be erroneous
Used for new products where there is not markeplac
Does not take into account product market demand
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