Joeston Corporation Makes a Product with the Following Costs: the Company

question 62

Multiple Choice

Joeston 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 14,000 units per year.The company has invested $540,000 in this product and expects a return on investment of 10%.The markup on absorption cost would be closest to:
$\begin{array}{c}\begin{array}{lll}\\ \text {Direct materials....................................................}\\ \text {Direct labor...........................................................}\\ \text {Variable manufacturing overhead..........................}\\ \text {Fixed manufacturing overhead...............................}\\ \text {Variable selling and administrative expenses..........}\\ \text {Fixed selling and administrative expenses..............}\end{array}\begin{array}{rr}\text { Per Unit } & \text { Per Year } \\\$ 14.70 & \\\$ 14.10 & \\\$ 3.70 & \\& \$ 305,200 \\\$ 3.00 & \\& \$ 163,800 \end{array}\end{array}$

• A)27.1%
• B)124.2%
• C)34.2%
• D)10.0%

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