Hummingbird Company uses the product cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing 25,000 units of Product K are as follows: Fixed costs:Factory overhead$25,000Selling and administrative expenses17,000Hummingbird desires a profit equal to a 5% rate of return on invested assets of $642,500.
(a)Determine the amount of desired profit from the production and sale of Product K.
(b)Determine the total manufacturing costs and the cost amount per unit for the production of 25,000 units of Product K.
(c)Determine the markup percentage for Product K.
(d)Determine the selling price of Product K.Round the markup percentage to one decimal place, and other intermediate calculations and final answer to two decimal places.

Question

Hummingbird Company uses the product cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing 25,000 units of Product K are as follows:​  Fixed costs:Factory overhead$25,000Selling and administrative expenses17,000​Hummingbird desires a profit equal to a 5% rate of return on invested assets of $642,500.​
(a)Determine the amount of desired profit from the production and sale of Product K.
(b)Determine the total manufacturing costs and the cost amount per unit for the production of 25,000 units of Product K.
(c)Determine the markup percentage for Product K.
(d)Determine the selling price of Product K.​Round the markup percentage to one decimal place, and other intermediate calculations and final answer to two decimal places.

Quizplus · Accepted Answer

The Answer of Hummingbird Company uses the product cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing 25,000 units of Product K are as follows:​  Fixed costs:Factory overhead$25,000Selling and administrative expenses17,000​Hummingbird desires a profit equal to a 5% rate of return on invested assets of $642,500.​
(a)Determine the amount of desired profit from the production and sale of Product K.
(b)Determine the total manufacturing costs and the cost amount per unit for the production of 25,000 units of Product K.
(c)Determine the markup percentage for Product K.
(d)Determine the selling price of Product K.​Round the markup percentage to one decimal place, and other intermediate calculations and final answer to two decimal places.

Hummingbird Company Uses the Product Cost Concept of Applying the Cost-Plus