Marvel Company Estimates That the Following Costs and Activity Would

Multiple Choice

Marvel Company estimates that the following costs and activity would be associated with the manufacture and sale of one unit of product Y:
$\begin{array}{|l|r|}\hline \text { Number of Units Sold Annually } & 20,000 \\\hline \text { Required Investment } & \$ 400,000 \\\hline \text { Unit Product Cost } & \$ 25 \\\hline \text { Selling, General, and Administrative } & \$ 130,000 \\ \text { Expenses } & \\\hline\end{array}$
If the company uses the absorption costing approach to cost-plus pricing and desires a 15% rate of return on investment (ROI) ,what would be the required markup on absorption cost for product Y?

A) 12%.
B) 15%.
C) 26%.
D) 38%.