The Markup Percentage in the Absorption-Cost Approach Is Calculated by Dividing

question 5

Multiple Choice

The markup percentage in the absorption-cost approach is calculated by dividing the sum of the desired ROI per unit and

• A)fixed costs per unit by manufacturing cost per unit.
• B)fixed costs per unit by variable costs per unit.
• C)selling and administrative expenses per unit by manufacturing cost per unit.
• D)selling and administrative expenses per unit by variable costs per unit.

---

Definitions:

Marginal Utility

The additional satisfaction or utility gained from consuming one more unit of a good or service.

Total Utility

The overall satisfaction or benefit a person receives from consuming a particular quantity of goods or services.

Income Effect

The alteration in a person's or an economy's earnings and its effect on the amount of a product or service they seek to purchase.

Law of Demand

The principle that there is an inverse relationship between the price of a good and the amount of it consumers are willing to buy, all else being equal.