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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Definitions:

Private Health Insurance

Health insurance coverage provided by private entities, offering plans to individuals outside of governmental schemes.

United States

A country in North America, consisting of 50 states, a federal district, five major self-governing territories, and various possessions.

Health Care Industry

The sector that provides medical services, manufactures medical equipment or drugs, provides medical insurance, or facilitates the provision of healthcare to patients.

Rapidly Rising Costs

A scenario where the expenses of producing goods or services increase significantly in a short period of time.