Question
Modern Co makes a product with the following costs: Per Unit Per Year Direct materials 20,8 Direct labor (variable cost) 15,2 Variable manufacturing overhead1,3 Variable
Modern Co makes a product with the following costs:
Per Unit Per Year
Direct materials 20,8
Direct labor (variable cost) 15,2
Variable manufacturing overhead1,3
Variable selling and administrative expenses4,2
Fixed manufacturing overhead1.252.900 py
Fixed selling and administrative expenses1.581.200 py
The company uses the absorption costing approach to cost-plus pricing. The pricing calculations are based on budgeted production and sales of 67,000 units per year. The company has invested $420,000 in this product and expects a return on investment of 12%.
The selling price based on the absorption costing approach is closest to:
56,3
83,8
84,6
126,5
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