Perwin Corporation Estimates That an Investment of $800,000 Would Be

Multiple Choice

Perwin Corporation estimates that an investment of $800,000 would be needed to produce and sell 50,000 units of Product B each year. At this level of activity, the unit product cost would be $50. Selling and administrative expenses would total $400,000 each year. The company uses the absorption costing approach to cost-plus pricing described in the text. If a 20% rate of return on investment is desired, then the required markup for Product B would be closest to:

A) 20%
B) 22%
C) 24%
D) 26%