Magney, Incorporated, Uses the Absorption Costing Approach to Cost-Plus Pricing

question 348

Multiple Choice

Magney, Incorporated, uses the absorption costing approach to cost-plus pricing described in the text to set prices for its products. Based on budgeted sales of 84,000 units next year, the unit product cost of a particular product is $40.80. The company's selling and administrative expenses for this product are budgeted to be $1,705,200 in total for the year. The company has invested $300,000 in this product and expects a return on investment of 14%.The selling price for this product based on the absorption costing approach would be closest to:

• A) $92.25
• B) $61.60
• C) $46.51
• D) $61.10

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Definitions:

Demand for Carpenters

The market need or desire for carpentry skills and services.

Wages

Payments made to employees in exchange for their labor, typically calculated on an hourly, daily, or piecework basis.

Price of Houses

The amount of money needed to buy a residential property, which can vary widely based on location, size, and other factors.

Demand for Product

The desire and willingness of consumers to purchase a specific good or service at a given price.