Nance Corporation is about to introduce a new product. The following costs would be incurred if 38,000 units are produced and sold each year:

	Per Unit	Total
Variable production costs	$ 12	$ 456,000
Fixed production costs	$ 8	$ 304,000
Variable selling and administrative costs	$ 3	$ 114,000
Fixed selling and administrative costs	$ 5	$ 190,000

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 $1,350,000. The company requires a 40% rate of return on investment in all new products. The markup under the absorption costing approach would be closest to:

Multiple Choice

86.0%

71.1%

111.1%

91.7%