Sample Company reported the following costs during 2008 for the manufacture and sale of 2000 units:
The average amount of capital invested in the product line during the year was $500 000 and the targeted return on investment was 20 per cent.If Sample's price per unit was $245 and the mark-up percentage was 53 per cent,what pricing formula was used by the company?

Question

Quizplus · Accepted Answer

The question mentions that the company reported costs for the manufacture and sale of the units, which includes both variable and fixed costs. Therefore, the pricing formula used is most likely absorption cost-plus, which includes all production costs (both variable and fixed) as part of the cost base for pricing. This is also supported by the fact that the question mentions a targeted return on investment, which is typically associated with absorption costing.

Sample Company Reported the Following Costs During 2008 for the Manufacture