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Cost-Based Pricing and Markups with Variable Costs

Computer Consultants Services provides computerized inventory consulting. The office and computer expenses are $800,000 annually and are not assigned to specific jobs. The consulting hours available for the year total 20,000, and the average consulting hour has $25 of variable costs.

(a) If the company desires a profit of $150,000, what should it charge per hour?Round to the nearest cent.

(b) What is the markup on variable costs if the desired profit is $200,000? Round to the nearest whole percent.

(c) If the desired profit is $75,000, what is the markup on variable costs to cover (1) unassigned costs and (2) desired profit? Round to the nearest whole percent.