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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 that it hopes to
Assume that a company uses the absorption costing approach to cost-plus pricing. It is considering the introduction of a new product that it hopes to produce and sell at a volume of 10,000 units per year. To determine a selling price, the company has gathered the following information: Direct materials per unit $ 11 Direct labor unit $ 10 Variable manufacturing overhead per unit $ 2 Variable selling expense $ 4 Total fixed manufacturing overhead $ 90,000 Fixed selling and administrative expense $ 40,000 Markup percentage on absorption cost 35% Using the absorption costing approach to cost-plus pricing, what selling price would the company establish for this product? Multiple Choice $38.60 $54.00 $48.60 $43.20
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