Lafave Corporation Uses the Absorption Costing Approach to Cost-Plus Pricing

Multiple Choice

Lafave Corporation uses the absorption costing approach to cost-plus pricing described in the text to set prices for its products.Based on budgeted sales of 79,000 units next year,the unit product cost of a particular product is $50.80.The company's selling and administrative expenses for this product are budgeted to be $1,896,000 in total for the year.The company has invested $260,000 in this product and expects a return on investment of 15%. The markup on absorption cost for this product would be closest to:

A) 62.2%
B) 15.0%
C) 47.2%
D) 48.2%