Longwood, Inc. manufactures various lines of computer equipment and is planning to introduce a new line of laptops. Current plans call for the production and sale of 500 units, with estimated costs as follows:

Variable costs:
Manufacturing	$	466,000
Selling and Administrative		116,000
Total variable costs					$	582,000
Fixed costs:
Manufacturing	$	316,000
Selling and Administrative		196,000
Total fixed costs						512,000
Total costs					$	1,094,000

The average amount of capital invested in the laptop product line is $840,000 and Longwoods target return on investment is 20%.

If Longwood uses cost-plus pricing based on absorption cost, the markup percentage the company must use would be:

Multiple Choice

15.36%.

21.27%.

29.19%.

61.38%.

None of the answers is correct.