Component QXP Sells for £300

Multiple Choice

Component QXP sells for £300. This selling price is calculated by adding 20% to the total absorption cost of each component. Overhead is absorbed into each unit of QXP at the rate of £8.75 per direct labour hour. Each unit of QXP takes 10 hours of direct labour to produce. What is the direct cost of each unit of component QXP?

A) £87.50
B) £152.50
C) £162.50
D) £212.50