Green Hornet Company Is Contemplating the Introduction of a New

question 58

Essay

Green Hornet Company is contemplating the introduction of a new product.The company has gathered the following information concerning the product:
$\begin{array}{|l|r|}\hline \text { Number of Units to Be Produced and Sold Each Year } & 16,000 \\\hline \text { Investment Required by the Company } & 400,000 \\\hline \text { Expected Unit Product cost } & \$ 30 \\\hline \text { Expected Annual Selling, General, and Administrative Expenses } & \$ 100,000 \\\hline \text { Desired Rate of Return on Investment } & 20 \% \\\hline\end{array}$
The company uses the absorption costing approach to cost-plus pricing.
Required:
a)Compute the markup on absorption cost.
b)Compute the target selling price.

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Definitions:

Novel Situation

A new or unfamiliar situation that requires adaptive behaviors or cognitive processes to navigate.

Stimulus Intensity

The magnitude or strength of a stimulus, which can affect the likelihood and manner of its perception and response.

Sensitization

The increased responsiveness or sensitivity to a stimulus or a range of stimuli following exposure.

Increased Anxiety

A heightened state of worry, nervousness, or unease, typically about an imminent event or something with an uncertain outcome.