E-Books Company Is Planning the Introduction of a New Product

question 73

Multiple Choice

E-books Company is planning the introduction of a new product. The following information relating to the product has been assembled:
$\begin{array}{|l|r|}\hline \text { Variable Costs (per unit) : } & \\\hline \text { Materials, Labour, and Overhead } & \$ 15 \\\hline \text { Selling and Administrative } & \$ 3 \\\hline \text { Fixed Costs per Year: } & \$ 375,000 \\\hline \text { Manufacturing Overhead } & \$ 300,000 \\\hline \text { Selling and Administrative } & \$ 750,000 \\\hline \text { Investment Required } & 20 \% \\\hline \text { Required Rate of Return } & 75,000 \\\hline \text { Total Units to Be Produced and Sold Each Year }\\\hline\end{array}$
The company uses the absorption costing approach to pricing.
- The markup percentage that would be needed on the new product is closest to which of the following?

• A) 12.5%.
• B) 24.0%.
• C) 51.0%.
• D) 45%.

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Definitions:

Job Rotation

A talent and workforce development strategy where employees work in various positions within an organization for a set period of time, to gain diverse skills and experiences.

Trainee's Existing

Refers to the current knowledge, skills, or attitudes that a learner possesses before undergoing a new training or educational program.

Skill Set

A combination of abilities, knowledge, and experiences that enhances an individual's capability to perform tasks or jobs.

Knowledge Acquisition

The process of obtaining understanding, skills, and information from experiences, education, or being taught.