The Management of Musselman Corporation Would Like to Set the Selling

question 52

Multiple Choice

The management of Musselman Corporation would like to set the selling price on a new product using the absorption costing approach to cost-plus pricing. The company's accounting department has supplied the following estimates for the new product:
Management plans to produce and sell 9,000 units of the new product annually. The new product would require an investment of $1,305,000 and has a required return on investment of 10%.
-The markup percentage on the new product would be closest to:

• A) 51.0%
• B) 12.5%
• C) 24.0%
• D) 59.5%

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Definitions:

Behavioral Economics Research

Behavioral economics research studies the effects of psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions and how those decisions vary from those implied by classical theory.

Anchoring Effect

A mental shortcut in which a person gives excessive weight to the first piece of information they receive (known as the "anchor") during decision-making processes.

Minimum Required Payment

The lowest amount that must be paid on an outstanding debt, such as a credit card bill, to avoid penalties.

Credit Card Companies

Financial institutions or corporations that issue credit cards to consumers, facilitating electronic payments and extending credit.