Question
Radiant Spa offers massage therapy sessions. Each session lasts one hour. The spa anticipates 3,500 sessions annually. They have invested $1,500,000 in their facilities and
Radiant Spa offers massage therapy sessions. Each session lasts one hour. The spa anticipates 3,500 sessions annually. They have invested $1,500,000 in their facilities and aim for an ROI of 20%. The budgeted costs for the coming year are shown below:
| Cost Item | Per Session ($) | Total ($) |
|---|---|---|
| Direct Materials (Oils, etc.) | 10 | 35,000 |
| Direct Labor (Therapists) | 50 | 175,000 |
| Variable Overhead | 15 | 52,500 |
| Fixed Overhead | - | 300,000 |
| Variable Selling & Admin Expenses | 10 | 35,000 |
| Fixed Selling & Admin Expenses | - | 150,000 |
Required:
- Determine the total cost per session.
- Calculate the desired ROI per session.
- Compute the target price per session.
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Financial Accounting
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
2nd Edition
0078110823, 9780078110825
