Ask Question
24 December, 09:42

Marvel Company estimates that the following costs and activity would be associated with the manufacture and sale of product Y: Number of units sold annually 23,000 Required investment $430,000 Unit product cost $22 Selling and administrative expenses $109,060 If the company uses the absorption costing approach to cost-plus pricing described in the text and desires a 17% rate of return on investment (ROI), the required markup on absorption cost for product Y would be closest to:

+3
Answers (1)
  1. 24 December, 11:46
    0
    36%

    Explanation:

    The required markup on absorption cost shall be calculated using the following formula:

    Markup on absorption cost=[ (ROI*amount Invested) + total selling and admin expenditure] / (product cost per unit * number of units sold)

    In the given question:

    ROI=17%

    Amount Invested=$430,000

    Total selling and admin expenditure=$109,060

    Product cost per unit=Unit product cost $22

    Number of units sold=23,000

    Markup on absorption cost=[ (17%*430,000) + 109,060] / (22 * 23,000)

    = 36%
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Marvel Company estimates that the following costs and activity would be associated with the manufacture and sale of product Y: Number of ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers