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Perkins Company estimates that an investment of $500,000 would be needed to produce and sell 25,000 units of Product A each year. At this level of activity, the unit product cost would be $40. Selling and administrative expenses would total $300,000 each year. The company uses the absorption costing approach to cost-plus pricing described in the text. If a 20% rate of return on investment is desired, then the required markup for Product A would be:

a. 10%

b. 20%

c. 30%

d. 40%

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M995215

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