Green Hornet Company Is Contemplating the Introduction of a New

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.