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Positive Living is a massage center that uses smart massage chairs for its service
Positive Living is a massage center that uses smart massage chairs for its service. These chairs can be rented per hour. The cost of operation per hour is ?62 per standard service hour. The charge rate is ?85.56 per hour. The maximum output of the massage center is 160,000 per year, and its fixed cost is ?2,024,000 per year.
Determine the following: Fixed cost per hour = _____ Total cost per year = _____ Profit per hour = _____
Expert Solution
Computation of Fixed Cost per Hour:
Fixed Cost per Hour = Total Fixed Cost per Year/Total Output for the Year
= 2,024,000/160,000
= 12.65 per hour
Computation of Total Cost per Year:
Total Cost per Year = (Fixed Cost per Hour + Cost of Operation per Hour)*Total Output for Year
= (12.65+62) * 160,000
= 74.65*160,000
= 11,944,000
Computation of Profit per Hour:
Profit per Hour = Charge Rate per Hour - (Fixed Cost per Hour + Cost of Operation per Hour)
= 85.56 - (12.65+62)
= 85.56 - 74.65
= 10.91 per Hour
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