(Appendix 12A)Green Hornet Company Is Contemplating the Introduction of a New

Essay

(Appendix 12A)Green Hornet Company is contemplating the introduction of a new product.The company has gathered the following information concerning the product:

$\begin{array}{lccc}\text { Number of Units to Be Produced and Sold Each } & 16,000 \\\text { Year } & \\\text { Investment Required by the Company } & \$ 400,000 \\\text { Expected Unit Product Cost } & \$ 30 \\\text { Expected Annual Selling, General, and } & \\\quad \text { Administrative Expenses } & \$ 100,000\\\text { Desired Rate of Return on Investment }&20 \%\\\end{array}$


The company uses the absorption costing approach to cost-plus pricing.

Required:

a)Compute the markup on absorption cost.
b)Compute the target selling price.