Dieckman Company Makes a Product with the Following Costs

Multiple Choice

Dieckman Company makes a product with the following costs: The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 71,000 units per year.
The company has invested $360,000 in this product and expects a return on investment of 13%.
Direct labor is a variable cost in this company.

-The markup on absorption cost is closest to:

A) 25.7%
B) 13.0%
C) 24.2%
D) 72.4%