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 1,300 sessions. The company has invested $2,342,600 in the studio and expects a return on investment (ROI) of 20%. Budgeted costs for the coming year are as follows.
|
|
Per Session |
|
Total |
|
Direct materials (tapes, CDs, etc) |
$ |
20.26 |
|
|
|
|
|
|
Direct labor |
$ |
397.68 |
|
|
|
|
|
|
Variable overhead |
$ |
47.21 |
|
|
|
|
|
|
Fixed overhead |
|
|
|
|
$ |
1,238,172 |
|
|
Variable selling and administrative expenses |
$ |
41.61 |
|
|
|
|
|
|
Fixed selling and administrative expenses |
|
|
|
|
$ |
647,231 |
|
Determine the desired ROI per session.