Perwin Corporation Estimates That an Investment of $800,000 Would Be

question 10

Multiple Choice

Perwin Corporation estimates that an investment of $800,000 would be needed to produce and sell 50,000 units of Product B each year. At this level of activity, the unit product cost would be $50. Selling and administrative expenses would total $400,000 each year. The company uses the absorption costing approach to cost-plus pricing described in the text. If a 20% rate of return on investment is desired, then the required markup for Product B would be closest to:

• A) 20%
• B) 22%
• C) 24%
• D) 26%

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Definitions:

Displacement

The quality of language that permits one to communicate information about objects and events in another time and place.

Language Acquisition Device

A hypothetical module in the human brain posited by Noam Chomsky, suggesting that the ability to learn language is innate to humans.

Nativist Approach

A theory suggesting that certain skills or abilities are "native" or hard-wired into the brain at birth.

Representativeness Heuristic

A mental shortcut used in problem-solving and decision-making where the likelihood of an event is estimated based on how closely it resembles the typical case.