Joey's Recording Studio rents studio time to musicians in 2-hour blocks. Each sessionincludes the use of the studio facilities, a digital recording of the performance, and a professional music producer/mixer. Anticipated annual volume is 16,000 sessions. Thecompany has invested $8,000,000 in the studio and expects a return on investment (ROI)of 15%. Budgeted costs for the coming year as follows:
Per Session Total
Direct materials$190
Direct labor$110
Variable overhead$85
Fixed overhead$3,300,000
Variable selling and administrative$75
Fixed selling and administrative$1,340,000
(a) Determine the total cost per session.(b) Determine the desired ROI per session.(c) Calculate the mark-up percentage on the total cost per session.(d) Calculate the target price per session.
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