Dieckman Company Makes a Product with the Following Costs

question 64

Multiple Choice

Dieckman Company 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 71,000 units per year.
The company has invested $360,000 in this product and expects a return on investment of 13%.
Direct labor is a variable cost in this company.

-The selling price based on the absorption costing approach is closest to:

• A)$70.88
• B)$41.60
• C)$56.40
• D)$57.06

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Definitions:

Reactiveness

The quality of responding to external stimuli or changes in the environment, typically characterized by adaptability or sensitivity.

Satisfactoriness

The condition or quality of meeting expectations or requirements; adequacy in performance or outcome.

Correspondence

The agreement or similarity between two things, or the process of matching, communicating, or equating them.

Organization

The arrangement or coordination of activities and tasks to achieve a specific purpose or result, often within an entity or among individuals.