Question

Haworth Company is a management consulting firm. Last​ month, Haworth completed a consulting job for Client 76 and assigned total costs of $ 16,400 to the job. Haworth desires a 20​% target operating income after covering all costs. What would Haworth have to charge the customer to achieve that operating​ income? Round to two decimal places.

Answer 1

Answer: $20500

Step-by-step explanation:

The following information can be depicted from the question:

Total cost of job = $16,400

Since Operating income is 20% of revenue, then the total cost will be:

= 100% - 20% = 80% of revenue.

Therefore, the required service revenue will be:

= $16,400/80%

= $163400/0.8

= $20,500