Question

Part 1

Calculating Price by Applying a Markup Percentage to Cost

The J. Escobar Law Firm provides various legal services to organizations. J. Escobar has decided to price its jobs at the total variable costs of the job plus 15 percent. The job for a medium-sized dance club client included the following costs:

Direct materials	$ 5,000
Direct labor (partners and staff accountants)	90,000
Depreciation (using straight-line method) on     Integrity’s office building	50,000

Required:

Calculate the price charged by The J. Escobar Law Firm to the dance club. If required, round to the nearest dollar.
$________

PART 2

Calculating a Target Cost

RU Listening manufactures cell phones and is developing a new model with a feature (targeted at parents of teens) that prevents the phone from dialing an owner-defined list of phone numbers between the hours of midnight and 6:00 a.m. The new phone model has a target price of $360. Management requires a 10% profit on new product revenues.

Required:

If required, round to the nearest dollar.

1. Calculate the amount of desired profit.
$

2. Calculate the target cost.
$

Answer 1

Answer Page. No Part direct materials cost $5000 direct labor( Partnerse staff accountank) = $90,000 depreciation (coing straight line method) on Integrity's office building = $50,000 Total variable costs = direct material costs + direct labor costs = Price $5000 + $90,000 $95000 $95000 X (1+15'.) = 95000 x 1.15 $109,250 :. The price changed by the J. Escobar law firm to the dance club $109,950 Part 2 O Amount of desired profit Amount of desired profit = Target price X profit % $360 X 10% - $ 36

.. Amount of desired profit = $36 Page: No @ Targest cogok Target cost fariget popce - amount of desired profil $36 $360 $324 i', Target cost = $324