Diehl Company Makes a Product with the Following Costs

Multiple Choice

Diehl 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 52,000 units per year.
The company has invested $420,000 in this product and expects a return on investment of 8%.
Direct labor is a variable cost in this company.
-If every 10% increase in price leads to an 11% decrease in quantity sold, the profit-maximizing price is closest to:

A) $234.46
B) $214.69
C) $256.45
D) $78.50