Dickson Company makes a product with the following costs:

	Per unit	Per year
Direct materials	$180.20
Direct labour	22.30
Variable Manufacturing overhead	2.90
Fixed manufacturing overhead		$1,296,000
Variable SG&A expenses	1.10
Fixed SG&A expenses		$1,104,000

The company uses the absorption costing approach to cost-plus pricing. The pricing calculations are based on budgeted production and sales of 60,000 units per year. The company has invested $320,000 in this product and expects a return on investment of 15%. Direct labour is a variable cost in this company.

(Appendix 12A) The markup on absorption cost is closest to which of the following?

Multiple Choice

15.0%

30.0%

31.2%

96.5%