Assume that a company uses the absorption costing approach to cost-plus pricing. It is considering the introduction of a new product. To determine a selling price, the company has gathered the following information:           Number of units to be produced and sold each year   15,000   Unit product cost $ 35.50   Estimated annual selling and administrative expenses $ 63,900   Estimated investment required by the company $ 780,000   Desired return on investment (ROI)   12 %   The selling price that the company would establish using a markup percentage on absorption cost is closest to:   Multiple Choice   $46.00.   $41.80.   $48.00.   $50.00.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Assume that a company uses the absorption costing approach to cost-plus pricing. It is considering the introduction of a new product. To determine a selling price, the company has gathered the following information:
 

       
Number of units to be produced and sold each year   15,000  
Unit product cost $ 35.50  
Estimated annual selling and administrative expenses $ 63,900  
Estimated investment required by the company $ 780,000  
Desired return on investment (ROI)   12 %
 

The selling price that the company would establish using a markup percentage on absorption cost is closest to:

 

Multiple Choice
  •  
    $46.00.
  •  
    $41.80.
  •  
    $48.00.
  •  
    $50.00.
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