Nance Corporation is about to introduce a new product. The following costs would be incurred if 44,000 units are produced and sold each year:

Per Unit Total

Variable production costs $ 11 $ 484,000

Fixed production costs $ 9 $ 396,000

Variable selling and administrative costs $ 3 $ 132,000

Fixed selling and administrative costs $ 5 $ 220,000

Nance Corporation uses the absorption costing approach to cost-plus pricing as described in the text.

Assume that the company has not yet determined a markup to use on the new product. The new product would require an investment of $1,480,000. The company requires a 30% rate of return on investment in all new products. The markup under the absorption costing approach would be closest to:

Multiple Choice

109.1%

90.5%

63.2%

50.5%