(Appendix 12A)Kircher,Inc The Company Uses the Absorption Costing Approach to Cost-Plus Pricing

question 93

Multiple Choice

(Appendix 12A) Kircher,Inc.manufactures a product with the following costs:

$\begin{array}{lcr}&\text { Per unit }&\text { Per year }\\\text { Direct materials } & \$ 24.90 \\\text { Direct labour } & 13.90 \\\text { Variable manufacturing overhead } & 2.10 \\\text { Fixed manufacturing overhead } &&\$ 1,182,600 \\\text { Variable SG\&A expenses } & 2.00 \\\text { Fixed SG\&A expenses } &&1,166,400\end{array}$

The company uses the absorption costing approach to cost-plus pricing.The pricing calculations are based on budgeted production and sales of 81,000 units per year.The company has invested $220,000 in this product and expects a return on investment of 15%.The target selling price based on the absorption costing approach would be closest to which of the following?

• A) $53.29.
• B) $71.90.
• C) $72.31.
• D) $93.67.

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Definitions:

Abstract Audience

A concept in which individuals imagine and cater their behavior or communication to an unspecified, broad group of people.

Hypothetical Thought

The ability to consider and evaluate scenarios, possibilities, and outcomes that are not derived from immediate reality but based on conjecture or possibility.

Concrete Operational Thinking

Refers to the stage in cognitive development, typically occurring between the ages of 7 and 12, where children gain the ability to think logically about concrete events and understand the concept of conservation.

Imagined Possibilities

Imagined possibilities refer to the cognitive ability to envision future scenarios or outcomes that are not immediately present or based on current reality.