Hummingbird Company uses the product cost concept of applying the cost-plus appr
ID: 2536809 • Letter: H
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:
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. Round your answer to one decimal place.
%__________
d. Determine the selling price of Product K. Round your answer to two decimal places.
$_________
Explanation / Answer
Answers
A
Invested Assets
$ 6,42,500.00
B
ROR
5%
C=AxB
Desired profit [Answer to requirement 'a']
$ 32,125.00
A
Total manufacturing variable cost per unit
$ 8.50
B
Units
25000
C=AxB
Total variable manufacturing cost
$ 2,12,500.00
D
Fixed factory overhead
$ 25,000.00
E
Fixed selling & admin
$ 17,000.00
F=C+D+E
Total cost [Answer 'b']
$ 2,54,500.00
G=F/B
Total cost per unit [Answer b]
$ 10.18
A
Desired profit [Answer to requirement 'a']
$ 32,125.00
B
Units
25000
C=A/B
Desired profit per unit
$ 1.29
D
Total cost per unit [Answer b]
$ 10.18
E=C/D
Mark up percentage [Answer 'c']
12.6%
F=C+D
Selling price per unit [Answer 'd']
$ 11.47
A
Invested Assets
$ 6,42,500.00
B
ROR
5%
C=AxB
Desired profit [Answer to requirement 'a']
$ 32,125.00
A
Total manufacturing variable cost per unit
$ 8.50
B
Units
25000
C=AxB
Total variable manufacturing cost
$ 2,12,500.00
D
Fixed factory overhead
$ 25,000.00
E
Fixed selling & admin
$ 17,000.00
F=C+D+E
Total cost [Answer 'b']
$ 2,54,500.00
G=F/B
Total cost per unit [Answer b]
$ 10.18
A
Desired profit [Answer to requirement 'a']
$ 32,125.00
B
Units
25000
C=A/B
Desired profit per unit
$ 1.29
D
Total cost per unit [Answer b]
$ 10.18
E=C/D
Mark up percentage [Answer 'c']
12.6%
F=C+D
Selling price per unit [Answer 'd']
$ 11.47
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