Hummingbird Company uses the product cost method of applying the cost-plus approach to product pricing. The costs and expenses of producing 25,000 units of Product K are as follows: Variable costs per unit: Direct materials $2.50 Direct labor 4.25 Factory overhead 1.25 Selling and administrative expenses 0.50 Total 8.50 Fixed costs: Factory overhead $25,000 Selling and administrative expenses 17,000 Hummingbird desires a profit equal to a 5% return on invested assets of $642,500. 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. Total manufacturing costs Cost amount per unit 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.

Hummingbird Company uses the product cost method of applying the cost-plus approach to product pricing. The costs and expenses of producing 25,000 units of Product K are as follows: Variable costs per unit: Direct materials $2.50 Direct labor 4.25 Factory overhead 1.25 Selling and administrative expenses 0.50 Total 8.50 Fixed costs: Factory overhead $25,000 Selling and administrative expenses 17,000 Hummingbird desires a profit equal to a 5% return on invested assets of $642,500. 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. Total manufacturing costs Cost amount per unit 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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

Hummingbird Company uses the product cost method of applying the cost-plus approach to product pricing. The costs and expenses of producing 25,000 units of Product K are as follows:
Variable costs per unit:
Direct materials
$2.50
Direct labor
4.25
Factory overhead
1.25
Selling and administrative expenses
0.50
Total
8.50
Fixed costs:
Factory overhead
$25,000
Selling and administrative expenses
17,000
Hummingbird desires a profit equal to a 5% 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.
Total manufacturing costs
Cost amount per unit
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.

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Step 2 a) Determination of desired profit of product k

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Step 4 b.) Statement showing the total manufacturing cost and per unit cost

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Step 5 b. Working notes

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Step 6 b.Answer

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Step 7 c. Determination the markup percentage of product K

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Step 9 d) Computation of selling price of product K

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