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:

Investment Firm

A company or entity that specializes in making investments on behalf of its clients and gives advice on financial securities.

Government Bonds

Debt securities issued by a government to finance its expenditures, offering a fixed or variable interest rate to investors.

Liability

The state of being legally responsible for something, especially in terms of debts or legal obligations.

Partnership

A legitimate business framework where two or more partners collaborate in managing the business and share its profits.