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 Y are as follows: Variable costs per unit:
Direct materials $2.50
Direct labor 4.25
Factory overhead 2.25
Selling and administrative expenses 0.50
Total $9.50
Fixed costs:
Factory overhead $25,000
Selling and administrative expenses 17,000
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 and sale of 25,000 units of Product K.
C) Determine the markup percentage for Product K.
D) Determine the selling price of Product K.