Cost-Based Pricing and Markups with Variable Costs Compu Services provides computerized inventory consulting. The office and computer expenses are $400,000 annually and are not assigned to specific jobs. The consulting hours available for the year total 20,000, and the average consulting hour has $20 of variable costs. (a) If the company desires a profit of $140,000, 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 $40,000, 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 %

Computing Markups The predicted 2009 costs for Osaka Motors are as follows:

Manufacturing Costs		Selling and Administrative Costs
Variable	$100,000	Variable	$300,000
Fixed	220,000	Fixed	200,000

Average total assets for 2009 are predicted to be $7,000,000. (a) If management desires a 13 percent rate of return on total assets, what are the markup percentages for total variable costs and for total manufacturing costs? (Round your answers to the nearest whole percent.) Markup on variable costs Answer % Markup on manufacturing costs Answer % (b) If the company desires a 10 percent rate of return on total assets, what is the markup percentage on total manufacturing costs for (1) unassigned costs and (2) desired profit? Note: The markup percentage on total manufacturing costs is 375%. Compute the markup percentage for each component. Note: Round your answers to the nearest whole percent.

Markup to cover unassigned costs Answer % Markup to cover desired profit Answer %