Question
Superior Sound offers audio system installations. Each installation takes approximately 6 hours. The company anticipates 500 installations annually. They have invested $1,000,000 in their facilities
Superior Sound offers audio system installations. Each installation takes approximately 6 hours. The company anticipates 500 installations annually. They have invested $1,000,000 in their facilities and aim for an ROI of 20%. The budgeted costs for the coming year are shown below:
| Cost Item | Per Installation ($) | Total ($) |
|---|---|---|
| Direct Materials (Equipment) | 100 | 50,000 |
| Direct Labor (Technicians) | 200 | 100,000 |
| Variable Overhead | 50 | 25,000 |
| Fixed Overhead | - | 200,000 |
| Variable Selling & Admin Expenses | 20 | 10,000 |
| Fixed Selling & Admin Expenses | - | 40,000 |
Required:
- Determine the total cost per installation.
- Calculate the desired ROI per installation.
- Compute the target price per installation.
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Financial Accounting
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann
2nd Edition
0078110823, 9780078110825
