Minden Corporation Estimates That the Following Costs and Activity Would

question 70

Multiple Choice

Minden Corporation estimates that the following costs and activity would be associated with the manufacture and sale of product A: If the company uses the absorption costing approach to cost-plus pricing described in the text and desires a 25% rate of return on investment (ROI) ,the required markup on absorption cost for Product A would be closest to:
$\begin{array}{lr}\text { Number of units sold annually ............................ } & 80,000 \\\text { Required investment............................... } & \$ 400,000 \\\text { Unit product cost........................... } & \$ 30 \\\text { Selling and administrative expenses................... } & \$ 300,000\end{array}$

• A)12%
• B)15%
• C)17%
• D)25%

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Definitions:

Consolidation

The process of combining multiple entities, assets, or financial statements into a single entity.

Merger

The combining of two or more companies into a single entity, typically with one company absorbing the others.

Combination

The act of merging or joining two or more entities into a single one, often used in the context of business mergers and acquisitions.

Shareholders' Approval

A formal consent required from shareholders to validate certain company decisions or actions.