Presented is the 2009 contribution income statement of Colgate Products. COLGATE PRODUCTS Contribution Income Statement For Year Ended December 31, 2009
Sales (12,000 units)		$1,440,000
Less variable costs
Cost of goods sold	$480,000
Selling and administrative	132,000	(612,000)
Contribution margin		828,000
Less fixed costs
Manufacturing overhead	510,000
Selling and administrative	220,000	(730,000)
Net income		$98,000

During the coming year, Colgate expects an increase in variable manufacturing costs of $8 per unit and in fixed manufacturing costs of $72,000. (a) If sales for 2010 remain at 12,000 units, what price should Colgate charge to obtain the same profit as last year? (b) Management believes that sales can be increased to 16,000 units if the selling price is lowered to $109. What would be the excepted profit (or loss) as a result of this action? Use a negative sign with your answer, if appropriate. (c) After considering the expected increases in costs, what sales volume is needed to earn a profit of $98,000 with a unit selling price of $109?

Cost-Based Pricing and Markups with Variable Costs Compu Services provides computerized inventory consulting. The office and computer expenses are $600,000 annually and are not assigned to specific jobs. The consulting hours available for the year total 20,000, and the average consulting hour has $30 of variable costs. (a) If the company desires a profit of $80,000, what should it charge per hour? (b) What is the markup on variable costs if the desired profit is $120,000? (c) If the desired profit is $120,000, what is the markup on variable costs to cover (1) unassigned costs and (2) desired profit? a) Markup to cover unassigned costs b) Markup to cover desired profits