Multiple ChoiceO49%44%39%34%G Assume that a company uses the absorption costing approach to cost-plus pricing. It is considering the introduction of a new product. Todetermine a selling price, the company has gathered the following information:Number of units to be produced and sold each yearUnit product costEstimated annual selling and administrative expensesEstimated investment required by the companyDesired return on investment (ROI)What is the markup percentage on absorption cost required to achieve the desired ROI?15,00030$$81,900$780,00012%

Lets understand the basics.Mark up is added on the unit cost to obtain certain amount of profit.…

Answered: O O O 49% 44% 39%

Business

Accounting

O O O 49% 44% 39%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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
Unit product cost
Estimated annual selling and administrative expenses
Estimated investment required by the company
Desired return on investment (ROI)
What is the markup percentage on absorption cost required to achieve the desired ROI?
15,000
30
$
$81,900
$780,000
12%

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