Ladle 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 81,000 units next year, the unit product cost of a particular product is $45.30. The company's selling and administrative expenses for this product are budgeted to be $1,898,000 in total for the year. The company has invested $262,000 in this product and expects a return on investment of 14%. The markup on absorption cost for this product would be: a. 14% b. 52.7% c. 51.7% d. 65.7%

Ladle 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 81,000 units next year, the unit product cost of a particular product is $45.30. The company's selling and administrative expenses for this product are budgeted to be $1,898,000 in total for the year. The company has invested $262,000 in this product and expects a return on investment of 14%. The markup on absorption cost for this product would be: a. 14% b. 52.7% c. 51.7% d. 65.7%

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 1CMA: Taylor Corporation is analyzing the cost behavior of three cost items, A, B, and C, to budget for...

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Taylor Corporation is analyzing the cost behavior of three cost items, A, B, and C, to budget for the upcoming year. Past trends have indicated the following dollars were spent at three different levels of output: In establishing a budget for 14,000 units, Taylor should treat A, B, and C costs as: a. semivariable, fixed, and variable, respectively. b. variable, fixed, and variable, respectively. c. semivariable, semivariable, and semivariable, respectively. d. variable, semivariable, and semivariable, respectively.
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