Magney, Incorporated, Uses the Absorption Costing Approach to Cost-Plus Pricing

Multiple Choice

Magney, Incorporated, uses the absorption costing approach to cost-plus pricing described in the text to set prices for its products. Based on budgeted sales of 84,000 units next year, the unit product cost of a particular product is $40.80. The company's selling and administrative expenses for this product are budgeted to be $1,705,200 in total for the year. The company has invested $300,000 in this product and expects a return on investment of 14%.The selling price for this product based on the absorption costing approach would be closest to:

A) $92.25
B) $61.60
C) $46.51
D) $61.10