Jaber Corporation Makes a Product with the Following Costs

question 60

Multiple Choice

Jaber 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 52,000 units per year. The company has invested $200,000 in this product and expects a return on investment of 9%.
The markup on absorption cost would be closest to:

• A)37.7%
• B)9.0%
• C)110.8%
• D)37.1%

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Definitions:

Conversion

The wrongful taking, using, or retaining possession of personal property that belongs to another.

Personal Property

Items of property that include movable assets as opposed to real property (land and buildings).

Gross Negligence

A legal concept signifying a severe degree of negligence demonstrating a reckless disregard for the safety or lives of others.

Punitive Damages

Monetary compensation awarded to a plaintiff that goes beyond what is necessary to compensate for losses and is intended to punish the defendant for egregious behavior.