Kircher, Inc The Company Uses the Absorption Costing Approach to Cost-Plus Pricing

Multiple Choice

Kircher, Inc., manufactures a product with the following costs: $\begin{array}{lrr}&\text { Per Unit } & \text { Per Year } \\\text {Direct materials }&\$ 24.90 & \\\text {Direct labor }&\$ 13.90 & \\\text {Variable manufacturing overhead }&\$ 2.10 \\\text { Fixed manufacturing overhead. }&&\$1,182,600\\\text { Variable selling and administrative expenses }&\$2.00\\\text { Fixed selling and administrative expenses }&&\$1,166,400\end{array}$ 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 81,000 units per year. The company has invested $220,000 in this product and expects a return on investment of 15%.
The selling price based on the absorption costing approach would be closest to:

A) $71.90
B) $72.31
C) $53.29
D) $93.67