The markup on absorption cost is closest to:
A) 12.0%
B) 51.0%
C) 49.6%
D) 126.7%

Question

Quizplus · Accepted Answer

11ea7761_1644_c540_81a5_1982e23450d7_TB2580_00 Selling and administrative expenses = ($4.20 per unit × 67,000 units) + $1,581,200 = $1,862,600
Markup percentage on absorption cost = [(Required ROI × Investment) + Selling and administrative expenses] ÷ (Unit product cost × Unit sales)
= [(12% × $420,000) + $1,862,600] ÷ ($56.00 per unit × 67,000 units)
= [($50,400) + $1,862,600] ÷ ($3,752,000)
= [$1,913,000] ÷ $3,752,000 = 51.0%

The Markup on Absorption Cost Is Closest To