Green Hornet Corporation is contemplating the introduction of a new product. The company has gathered the following information concerning the product: $\begin{array}{lr}
\text {Number of units to be produced and sold each year. }&16,000 \
\text {Investment required by the company }&\$ 400,000 \
\text { Expected unit product cost. }&\$ 30 \
\text { Expected annual selling and administrative expenses }&\$ 100,000 \
\text { Desired rate of return on investment.}&20 \%
\end{array}$ The company uses the absorption costing approach to cost-plus pricing as described in the text.
Required:
a. Compute the markup on absorption cost.
b. Compute the selling price.

Question

Green Hornet Corporation is contemplating the introduction of a new product. The company has gathered the following information concerning the product: $\begin{array}{lr}
\text {Number of units to be produced and sold each year.  }&16,000 \
\text {Investment required by the company }&\$ 400,000 \
\text { Expected unit product cost. }&\$ 30 \
\text { Expected annual selling and administrative expenses  }&\$ 100,000 \
\text { Desired rate of return on investment.}&20 \%
\end{array}$ The company uses the absorption costing approach to cost-plus pricing as described in the text.
Required:
a. Compute the markup on absorption cost.
b. Compute the selling price.

Quizplus · Accepted Answer

The Answer of Green Hornet Corporation is contemplating the introduction of a new product. The company has gathered the following information concerning the product: $\begin{array}{lr}
\text {Number of units to be produced and sold each year.  }&16,000 \
\text {Investment required by the company }&\$ 400,000 \
\text { Expected unit product cost. }&\$ 30 \
\text { Expected annual selling and administrative expenses  }&\$ 100,000 \
\text { Desired rate of return on investment.}&20 \%
\end{array}$ The company uses the absorption costing approach to cost-plus pricing as described in the text.
Required:
a. Compute the markup on absorption cost.
b. Compute the selling price.

Green Hornet Corporation Is Contemplating the Introduction of a New