Nance Corporation Is About to Introduce a New Product

question 112

Multiple Choice

Nance Corporation is about to introduce a new product. The following costs would be incurred if 40,000 units are produced and sold each year: Nance Corporation uses the absorption costing approach to cost-plus pricing as described in the text.
Assume that the company has not yet determined a markup to use on the new product. The new product would require an investment of $1,200,000. The company requires a 25% rate of return on investment in all new products. The markup under the absorption costing approach would be closest to:

• A) 70.0%
• B) 50.0%
• C) 83.3%
• D) 63.3%

---

Definitions:

Appropriate Reagents

Correctly chosen chemicals used to bring about a desired chemical reaction, based on the necessary conditions and outcomes.

Alkene

Unsaturated hydrocarbons containing at least one double bond between carbon atoms, part of the family of olefins.

Enantiomers

Molecules that are mirror images of each other and are non-superimposable.

Asymmetric Carbon Atoms

Atoms of carbon in a molecule that are bonded to four different groups, leading to chirality or optical activity.