(Appendix 12A)Kircher,Inc The Company Uses the Absorption Costing Approach to Cost-Plus Pricing

Multiple Choice

(Appendix 12A) Kircher,Inc.manufactures a product with the following costs:

$\begin{array}{lcr}&\text { Per unit }&\text { Per year }\\\text { Direct materials } & \$ 24.90 \\\text { Direct labour } & 13.90 \\\text { Variable manufacturing overhead } & 2.10 \\\text { Fixed manufacturing overhead } &&\$ 1,182,600 \\\text { Variable SG\&A expenses } & 2.00 \\\text { Fixed SG\&A expenses } &&1,166,400\end{array}$

The company uses the absorption costing approach to cost-plus pricing.The pricing calculations are based on budgeted production and sales of 81,000 units per year.The company has invested $220,000 in this product and expects a return on investment of 15%.The target selling price based on the absorption costing approach would be closest to which of the following?

A) $53.29.
B) $71.90.
C) $72.31.
D) $93.67.