The firm uses the absorption costing approach to cost-plus pricing to set prices for its products. Based on budgeted sales of 50,000 units next year, the unit product cost of a particular product is ₱75.00. The company's selling, general, and administrative expenses for this product are budgeted to be ₱1,800,000 in total for the year. The company has invested ₱800,000 in this product and expects a return on investment of 12%. Tax rate is 25%. The selling price for this product based on the absorption costing approach described in the text would be closest to: a. ₱ 39.28 b. ₱ 51.41 c. ₱ 93.75 d. ₱ 84.00 e. ₱ 102.75 f. ₱ 113.56
The firm uses the absorption costing approach to cost-plus pricing to set prices for its products. Based on budgeted sales of 50,000 units next year, the unit product cost of a particular product is ₱75.00. The company's selling, general, and administrative expenses for this product are budgeted to be ₱1,800,000 in total for the year. The company has invested ₱800,000 in this product and expects a return on investment of 12%. Tax rate is 25%. The selling price for this product based on the absorption costing approach described in the text would be closest to: a. ₱ 39.28 b. ₱ 51.41 c. ₱ 93.75 d. ₱ 84.00 e. ₱ 102.75 f. ₱ 113.56
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The firm uses the absorption costing approach to cost-plus pricing to set prices for its products. Based on budgeted sales of 50,000 units next year, the unit product cost of a particular product is ₱75.00. The company's selling, general, and administrative expenses for this product are budgeted to be ₱1,800,000 in total for the year. The company has invested ₱800,000 in this product and expects a return on investment of 12%. Tax rate is 25%. The selling price for this product based on the absorption costing approach described in the text would be closest to:
a. ₱ 39.28 b. ₱ 51.41 c. ₱ 93.75
d. ₱ 84.00 e. ₱ 102.75 f. ₱ 113.56
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