Ladle Corporation Uses the Absorption Costing Approach to Cost-Plus Pricing

Multiple Choice

Ladle Corporation uses the absorption costing approach to cost-plus pricing described in the text to set prices for its products. Based on budgeted sales of 88,000 units next year, the unit product cost of a particular product is $46.00. The company's selling and administrative expenses for this product are budgeted to be $1,905,000 in total for the year. The company has invested $269,000 in this product and expects a return on investment of 12%.The markup on absorption cost for this product would be closest to:

A) 58.9%
B) 12.0%
C) 47.1%
D) 47.9%