Dieckman Company makes a product with the following costs: The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 71,000 units per year.
The company has invested $360,000 in this product and expects a return on investment of 13%.
Direct labor is a variable cost in this company.

-The selling price based on the absorption costing approach is closest to:
A)$70.88
B)$41.60
C)$56.40
D)$57.06

Question

Dieckman Company makes a product with the following costs:  The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 71,000 units per year.
The company has invested $360,000 in this product and expects a return on investment of 13%.
Direct labor is a variable cost in this company.

-The selling price based on the absorption costing approach is closest to:
A)$70.88 
B)$41.60 
C)$56.40 
D)$57.06

Quizplus · Accepted Answer

The Answer of Dieckman Company makes a product with the following costs:  The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 71,000 units per year.
The company has invested $360,000 in this product and expects a return on investment of 13%.
Direct labor is a variable cost in this company.

-The selling price based on the absorption costing approach is closest to:
A)$70.88 
B)$41.60 
C)$56.40 
D)$57.06

Dieckman Company Makes a Product with the Following Costs