Mercer Company Is Planning the Introduction of a New Product

question 13

Multiple Choice

Mercer Company is planning the introduction of a new product. The following information relating to the product has been assembled:
$\begin{array}{|l|r|}\hline \text { Variable Costs (per unit) : } & \\\hline \text { Materails, Labour, and Overhead } & \$ 12 \\\hline \text { Selling and Administrative } & \$ 3 \\\hline \text { Fixed Costs per Year: } & \$ 360,000 \\\hline \text { Manufacturing Overhead } & \$ 300,000 \\\hline \text { Selling and Administrative } & \$ 650,000 \\\hline \text { Investment Required } & 25 \% \\\hline \text { Required Rate of Return } & 60,000 \\\hline \text { Total Units to Be Produced and Sold Each Year } & \\\hline\end{array}$
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) 59.5%.

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Definitions:

Health Benefits

The positive effects on well-being and physical condition that come from engaging in healthy behaviors or receiving medical treatments.

Flex-Time

A flexible work arrangement allowing employees to alter their start and end times, accommodating personal needs and preferences.

Pregnancy Discrimination

Unfair treatment of a woman in the workplace due to her pregnancy, affecting her job security, opportunities, and income.

EEOC

Equal Employment Opportunity Commission, a federal agency that enforces laws against workplace discrimination in the United States.