Green Hornet Corporation Is Contemplating the Introduction of a New

question 72

Essay

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.

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Definitions:

Slaves and Slavery

The forced bondage and labor of people, where individuals are owned by others, a practice historically found in various cultures and societies around the world.

1770s and 1780s

The decades marking the American Revolutionary War and the formative years of the United States, leading to the adoption of the Constitution.

Loyalists

Individuals who remain loyal to the established government or ruling authority, especially during times of revolt or revolution.