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

question 14

Multiple Choice

Lafave Corporation uses the absorption costing approach to cost-plus pricing described in the text to set prices for its products.Based on budgeted sales of 79,000 units next year,the unit product cost of a particular product is $50.80.The company's selling and administrative expenses for this product are budgeted to be $1,896,000 in total for the year.The company has invested $260,000 in this product and expects a return on investment of 15%. The markup on absorption cost for this product would be closest to:

• A)62.2%
• B)15.0%
• C)47.2%
• D)48.2%

Comprehend how market price influences consumer and producer surpluses.

Grasp the calculation of total revenues in a market context.

Understand the effects of market prices on total revenues received by sellers.

Recognize the role of equilibrium in determining market outcomes, including consumer and producer surpluses.

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