Ladle Corporation Uses the Absorption Costing Approach to Cost-Plus Pricing

question 320

Multiple Choice

Ladle Corporation uses the absorption costing approach to cost-plus pricing described in the text to set prices for its products. Based on budgeted sales of 63,000 units next year, the unit product cost of a particular product is $39.00. The company's selling and administrative expenses for this product are budgeted to be $1,020,600 in total for the year. The company has invested $560,000 in this product and expects a return on investment of 11%.The markup on absorption cost for this product would be closest to:

• A) 12.0%
• B) 41.5%
• C) 52.5%
• D) 44.0%

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Definitions:

Minimum Wage Laws

Regulations that dictate the lowest legal hourly compensation employers must pay their workers.

Minimum Wage

The lowest wage rate that employers can legally pay their workers, established by government regulation.

Employment Level

A measure indicating the number of people currently employed in an economy, typically not including those self-employed.

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Individuals who have employment but whose incomes fall below a specific poverty line due to low wages and insufficient hours.