Marvel Company estimates that the following costs and activity would be associated with the manufacture and sale of one unit of product Y: $\begin{array}{ll}
\text {Number of units sold annually }&20,000 \
\text { Required investment}&\$400,000 \
\text { Unit product cost.}&\$25 \
\text {Selling and administrative expenses. }& \$130,000\
\end{array}$
If the company uses the absorption costing approach to cost-plus pricing described in the text and desires a 15% rate of return on investment (ROI), the required markup on absorption cost for product Y would be:
A)12%
B)15%
C)26%
D)38%

Question

Marvel Company estimates that the following costs and activity would be associated with the manufacture and sale of one unit of product Y: $\begin{array}{ll}
\text {Number of units sold annually }&20,000 \
\text { Required investment}&\$400,000 \
\text { Unit product cost.}&\$25 \
\text {Selling and administrative expenses. }& \$130,000\
\end{array}$
 If the company uses the absorption costing approach to cost-plus pricing described in the text and desires a 15% rate of return on investment (ROI), the required markup on absorption cost for product Y would be:
A)12%
B)15%
C)26%
D)38%

Quizplus · Accepted Answer

The Answer of Marvel Company estimates that the following costs and activity would be associated with the manufacture and sale of one unit of product Y: $\begin{array}{ll}
\text {Number of units sold annually }&20,000 \
\text { Required investment}&\$400,000 \
\text { Unit product cost.}&\$25 \
\text {Selling and administrative expenses. }& \$130,000\
\end{array}$
 If the company uses the absorption costing approach to cost-plus pricing described in the text and desires a 15% rate of return on investment (ROI), the required markup on absorption cost for product Y would be:
A)12%
B)15%
C)26%
D)38%

Marvel Company Estimates That the Following Costs and Activity Would