Joeston Corporation Makes a Product with the Following Costs The Company Uses the Absorption Costing Approach to Cost-Plus Pricing

question 97

Multiple Choice

Joeston Corporation makes a product with the following costs:
$\begin{array}{|l|r|r|}\hline & \text { Per unit } & \text { Per year } \\\hline \text { Direct materials } & \$ 14.70 & \\\hline \text { Direct labour } & 14.1 \mathrm{~d} & \\\hline \text { Variable Manufacturing overhead } & 3.70 & \\\hline \text { Fixed manufacturing overhead } & &\$ 305,200\\\hline \text { Variable SG\&A expenses } & 3.00 & \\\hline \text { Fixed SG\&A expenses } & & 163,800\\\hline\end{array}$
The company uses the absorption costing approach to cost-plus pricing.The pricing calculations are based on budgeted production and sales of 14,000 units per year.The company has invested $540,000 in this product and expects a return on investment of 10%.The markup on absorption cost would be closest to which of the following?

• A) 10.0%.
• B) 27.1%.
• C) 34.2%.
• D) 124.2%.

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Definitions:

Visionary Blocks

Obstacles that hinder an individual's ability to perceive future possibilities or innovative ideas, often due to cognitive or environmental factors.

Vertical Thinking

A problem-solving approach that involves analyzing and breaking down a problem into its components in a linear, step-by-step manner.

Logical Process

refers to a methodical, rational approach to reasoning and problem-solving, often following a clear sequence of steps.

Political Model

A framework used to analyze the power dynamics, conflicts, and interests within organizations or governmental structures.