Cost$-$Based Pricing

and Markups with Variable Costs

Compu Services provides computerized inventory consulting. The office and computer expenses are $$600,000$ annually and are not assigned to specific jobs. The consulting hours available for the year total $20,000,$ and the average consulting hour has $$30$ of variable costs.

$($a$)$ If the company desires a profit of $$80,000,$ what should it charge per hour?

Answer: $ $\_\_\_\_$

$($b$)$ What is the markup on variable costs if the desired profit is $$120,000?$

Answer: $\_\_\_\_\%$

$($c$)$ If the desired profit is $$120,000,$ what is the markup on variable costs to cover $(1)$ unassigned costs and $(2)$ desired profit?

Markup to cover unassigned costs Answer: $\_\_\_\_\%$

Markup to cover desired profits Answer: $\_\_\_\_\%$