The Following Costs Relate to Tower Company: Variable Manufacturing Cost

question 17

Multiple Choice

The following costs relate to Tower Company: Variable manufacturing cost, $30; variable selling and administrative cost, $8; applied fixed manufacturing overhead, $15; and allocated fixed selling and administrative cost, $4.
- If Tower uses absorption manufacturing-cost pricing formulas, the company's markup percentage would be computed on the basis of:

• A) $30.
• B) $38.
• C) $45.
• D) $57.
• E) None of the answers is correct.

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Definitions:

Rent

The payment made by a tenant to a landlord for the use of a property, building, or land.

Marginal Revenue Product

The increased earnings resulting from the application of one additional production factor, such as workforce or investment.

Additional Revenue

Extra income received by a business or government beyond what was originally forecasted or expected.

Factor of Production

Resources used in the production of goods and services, such as labor, capital, land, and entrepreneurship.