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Exercise 22-6 Alma's Recording Studio rents studio time to musicians in 2-hour blocks. Each session includes the use of the studio facilities, a digital recording of the performance, and a professional music producer/mixer. Anticipated annual volume is 1,020 sessions. The company has invested $2,341,000 in the studio and expects a return on investment (ROI) of 20%. Budgeted costs for the coming year are as follows. Total Per Session $ 19.94 $395.00 $ 45.00 Direct materials (CDs, etc.) Direct labor Variable overhead Fixed overhead Variable selling and administrative expenses Fixed selling and administrative expenses $973,080 $ 41.00 $507,960 Determine the total cost per session. (Round answer to 2 decimal places, e.g. 10.50.) Total cost & per session LINK TO TEXT Determine the desired ROI per session. (Round answer to 2 decimal places, e.g. 10.50.) ROI $ per session

Answer 1

1
Direct materials	19.94
Direct labor	395.00
Variable overhead	45.00
Fixed overhead	954.00		=973080/1020
Variable selling and administrative expense	41.00
Fixed selling and administrative expense	498.00		=507960/1020
Total cost	1952.94	per session
2
ROI	459.02	per session	=(2341000*20%)/1020
3
ROI	459.02
Divide by Total cost	1952.94
Markup Percentage	23.50	% per session
4
Total cost	1952.94
Add: ROI	459.02
Target price	2411.96	per session