Dickson Corporation Makes a Product with the Following Costs

question 22

Multiple Choice

Dickson Corporation makes a product with the following costs: The company uses the absorption costing approach to cost-plus pricing described in the text.The pricing calculations are based on budgeted production and sales of 60, 000 units per year. The company has invested $320, 000 in this product and expects a return on investment of 15%.
Direct labor is a variable cost in this company.
If every 10% increase in price leads to a 14% decrease in quantity sold, the profit-maximizing price is closest to:

• A)$84.50
• B)$124.25
• C)$120.90
• D)$117.91

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Definitions:

Cerumen Impaction

A blockage of the ear canal with earwax (cerumen), which can cause pain and hearing loss.

Immobilization

The act of restricting movement to prevent further injury or to assist in the healing process of bones, joints, or muscles.

Stapes

A small, stirrup-shaped bone in the middle ear that plays a key role in transmitting sound vibrations to the inner ear.

Bony Labyrinth

A complex system of channels and cavities within the temporal bone of the skull, housing the organs of hearing and balance.