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

question 122

Multiple Choice

Lacy Corporation uses the absorption costing approach to cost-plus pricing to set prices for its products.Based on budgeted sales of 86,000 units next year,the unit product cost of a particular product is $81.60.The company's selling,general,and administrative expenses for this product are budgeted to be $1,247,000 in total for the year.The company has invested $360,000 in this product and expects a return on investment of 12%.The markup on absorption cost for this product would be closest to which of the following?

• A) 12.0%.
• B) 17.8%.
• C) 18.4%.
• D) 29.8%.

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