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

question 21

Essay

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.

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Definitions:

Personal Responsibility

The concept of holding oneself accountable for one's actions and accepting the consequences that come with them.

Cohesive Group

A group in which members feel bonded together, promoting mutual respect, agreement, and support for each other.

Groupthink

A psychological phenomenon that occurs within a group of people in which the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.

Outside Opinion

Perspectives or advice coming from individuals not directly involved in a situation or issue.