Werry Company Is About to Introduce a New Product

Multiple Choice

Werry Company is about to introduce a new product. It is expected that the following costs would be incurred when 25,000 units are produced and sold in a year: Werry Company uses the absorption costing approach to cost-plus pricing as described in the text.
-Assume that Werry Company has not yet determined a markup to use on the new product.The new product would require an investment of $800,000.The company requires a 20% rate of return on investment on all new products.The markup under the absorption costing approach would be closest to:

A) 62.0%
B) 80.0%
C) 35.0%
D) 24.6%