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

question 31

Multiple Choice

Lagace 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 20,000 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 $354,000 in total for the year. The company has invested $260,000 in this product and expects a return on investment of 13%.
The markup on absorption cost for this product would be closest to:

• A) 34.7%
• B) 23.8%
• C) 13.0%
• D) 21.7%

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