Telnet communications provides support services to its clients
This company expects to earn an annual return on the assets invested at a rate of: 10%
The company has the following amount invested in the business: $4,000,000
The annual budgeted costs for next year are:
	Variable costs	Fixed costs
Support Services	$300,000	950,000
The annual budgeted hours for next year are:
Consulting services	30,000	hours
Required:
1. Determine the Target profit for the company.
2. Determine the markup on variable costs in percentage terms.
3. Determine the variable cost per hour.
4. Determine the revenue per hour that will be charged if variable costs is the basis for markup.
5. Determine the markup on total costs in percentage terms.
6. Determine the total cost per hour.
7. Determine the revenue per hour that will be charged if total costs is the basis for markup.
8. Explain why answers 2-4 in comparison to 5-7 are the same or different.
9. Discuss the advantages and disadvantages of using a cost-based pricing model.