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

question 2

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:

Disaccharide

A type of sugar formed by the combination of two monosaccharides, such as lactose and sucrose.

Polysaccharides

Complex carbohydrates formed from chains of monosaccharides, playing critical roles in energy storage and structural functions in living organisms.

Disaccharide

A type of carbohydrate made up of two monosaccharide molecules bonded together.

Monosaccharide

The simplest form of carbohydrate, consisting of a single sugar molecule, such as glucose or fructose.