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

question 43

Multiple Choice

Ecob Corporation uses the absorption costing approach to cost-plus pricing as described in the text to set prices for its products. Based on budgeted sales of 19,000 units next year, the unit product cost of a particular product is $16.00. The company's selling and administrative expenses for this product are budgeted to be $250,800 in total for the year. The company has invested $440,000 in this product and expects a return on investment of 14%.The markup on absorption cost for this product would be closest to:

• A) 96.5%
• B) 102.8%
• C) 14.0%
• D) 82.5%

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Definitions:

System II Thinking

A cognitive process that is slower, more deliberative, and more logical than instinctive and quick System I thinking.

Unwarranted Assumptions

Beliefs or premises accepted without sufficient evidence or justification, often leading to flawed conclusions.

Restructuring

A cognitive process in problem-solving and learning that involves changing the problem's representation or the solution's approach.

Mastership

The possession or demonstration of masterly skill or great proficiency.