Eckert Company Uses the Absorption Costing Approach to Cost-Plus Pricing

question 135

Multiple Choice

Eckert Company uses the absorption costing approach to cost-plus pricing to set prices for its products. Based on budgeted sales of 18,000 units next year, the unit product cost of a particular product is $60.40. The company's selling, general, and administrative expenses for this product are budgeted to be $370,800 in total for the year. The company has invested $260,000 in this product and expects a return on investment of 11%.
- The target selling price based on the absorption costing approach for this product would be closest to which of the following?

• A) $67.04.
• B) $81.00.
• C) $82.59.
• D) $110.76.

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Definitions:

Reactance Theory

A psychological theory suggesting that people have an aversive reaction to restrictions of their freedoms, leading to a motivation to regain them.

Forbidden Behaviors

Acts that are prohibited or discouraged within a society or group due to cultural, social, or legal norms and values.

Strict Parents

caregivers who enforce rigid rules and expect high levels of obedience and discipline from their children.

Tempted

The feeling or state of being enticed or inclined to do something, often something unwise or wrong.