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Calculating Price by Applying a Markup Percentage to Cost Integrity Accounting Firm provides various financial services to organizations
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.
Expert Solution
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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