Edelheit Company Uses the Absorption Costing Approach to Cost-Plus Pricing

question 42

Multiple Choice

Edelheit Company 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 26,000 units next year, the unit product cost of a particular product is $24.20. The company's selling and administrative expenses for this product are budgeted to be $629,000 in total for the year. The company has invested $340,000 in this product and expects a return on investment of 14%.
-The selling price based on the absorption costing approach for this product would be closest to:

• A)$27.59
• B)$50.22
• C)$48.40
• D)$100.46

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Definitions:

Levels of Processing Model

A theory that suggests memory retention is directly related to the depth of mental processing, with deeper levels of analysis leading to more meaningful connections and better recall.

Elaborative Rehearsal

A memory technique that involves thinking about the meaning of the term to be remembered, as opposed to simply repeating the term to oneself.

Maintenance Rehearsal

A cognitive strategy for keeping information active in short-term memory by repetitively verbalizing or thinking about the information.

Elaborative Rehearsal

A memory technique that involves thinking about the meaning of the information and making connections to other information in memory.