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

question 45

Multiple Choice

Eckert Corporation uses the absorption costing approach to cost-plus pricing as described in the text to set prices for its products.Based on budgeted sales of 18, 000 units next year, the unit product cost of a particular product is $60.40.The company's selling and administrative expenses for this product are budgeted to be $370, 800 in total for the year.The company has invested $260, 000 in this product and expects a return on investment of 11%. The selling price based on the absorption costing approach for this product would be closest to:

• A)$110.76
• B)$81.00
• C)$67.04
• D)$82.59

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Definitions:

Par Common Stock

The nominal or face value of a share of common stock as stated in the corporate charter, with no direct link to the market value.

Articles Of Incorporation

Legal documents filed with a governmental body to legally document the creation of a corporation.

Shares

Portions of ownership in a corporation.

Date Of Record

A specific date set by a company on which the shareholders of record are entitled to receive a dividend or other distribution.