Question

Hello, I am requesting help with #4.... I'm a little confused on what the question is asking. Thank you in advance.

Communications Unlimited provides support services to its clients.
This company expects to earn an annual return on the assets invested at a rate of:			16%
The company has the following amount invested in the business:			$6,000,000
The annual budgeted costs for next year are:
	Variable costs	Fixed costs
Support Services	$400,000	1,900,000
The annual budgeted hours for next year are:
Consulting services	50,000	hours
Required:	You must use cell references for all calculations.
1.  Determine the Target profit for the company.
$                                                                            960,000.00
2.  Determine the markup on variable costs in percentage terms.
$                                                                                       1.40
3.  Determine the  variable cost per hour.
$                                                                                       8.00
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.			Variable + Fixed
42%			$2,300,000

Answer 1

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Communications Unlimited
Answer a
Amount invested in the business	6,000,000.00	A
Desired return	16%	B
Target Profit	960,000.00	C=A*B
Total Mark up
Desired return	960,000.00	See C
Total Fixed costs	1,900,000.00	D
Total Mark up	2,860,000.00	E=C+D
Answer 1
Total Variable costs	400,000.00	F
Total Mark up	2,860,000.00	See E
Markup on Total Variable costs	715.00%	G=E/F
Answer 2
Total Variable costs	400,000.00	See F
Annual budgeted hours	50,000.00	H
Variable costs per hour	8.00	I=F/H
Answer 3
Total Variable costs	400,000.00	See F
Total Mark up	2,860,000.00	See E
Total Revenue	3,260,000.00	J=F+E
Annual budgeted hours	50,000.00	See H
Revenue per hour	65.20	K=J/H
Answer 4
Total Variable costs	400,000.00	See F
Total Fixed costs	1,900,000.00	See D
Total costs	2,300,000.00	L=F+D
Desired return	960,000.00	See C
Markup on Total costs	42.00%	M=C/L