Lacy Corporation Uses the Absorption Costing Approach to Cost-Plus Pricing

question 30

Multiple Choice

Lacy Corporation uses the absorption costing approach to cost-plus pricing described in the text to set prices for its products. Based on budgeted sales of 86,000 units next year, the unit product cost of a particular product is $81.60. The company's selling and administrative expenses for this product are budgeted to be $1,247,000 in total for the year. The company has invested $360,000 in this product and expects a return on investment of 12%. The markup on absorption cost for this product would be closest to:

• A)12.0%
• B)18.4%
• C)29.8%
• D)17.8%

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Definitions:

Affective Forecasting

The process of predicting how one will feel in the future, often with a focus on emotional reactions to specific events.

Compensatory Responses

Physiological reactions that occur in opposition to the effects of a drug or stimulus to maintain homeostasis.

Average Emotions

The typical or mean level of emotional responses or feelings experienced by an individual or group over a period.

Thematic Apperception Test

A projective psychological test where subjects interpret ambiguous images, used to explore their emotions, thoughts, and conflicts.