Sara's company manufactures a product with the following costs: Per Unit Per Year Direct materials $...

Sara's company manufactures a product with the following costs:

	Per Unit		Per Year
Direct materials	$	25.30
Direct labor	$	14.30
Variable manufacturing overhead	$	2.50
Fixed manufacturing overhead			$	1,275,000
Variable selling and administrative expenses	$	2.40
Fixed selling and administrative expenses			$	1,249,500

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 85,000 units per year.

The company has invested $260,000 in this product and expects a return on investment of 15%.

The selling price based on the absorption costing approach would be closest to: (Do not round intermediate calculations.)

Multiple Choice

a. $74.66

b. $64.70

c. $82.00

d. $51.25

Expert Solution

ekkarill92 answered 3 years ago

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