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Calculating Price by Applying a Markup Percentage to Cost

Integrity Accounting Firm provides various financial services to organizations. Integrity has

decided to price its jobs at the total variable costs of the job plus 15.6 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 Integrity Accounting Firm to the dance club. If required, round to the nearest dollar.

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Computation of the price charged by the Integrity Accounting Firm to the dance club:-

Variable cost = Direct materials + Direct labor

= $5,000 + $90,000

= $95,000

Price = Variable cost * (1 + Markup %)

= $95,000 * (1 + 15.6%)

= $109,820

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