Problem
Kircher, Inc., manufactures a product with the following costs:
|
|
Per Unit
|
Per Year
|
|
Direct materials
|
$26.20
|
|
|
Direct labor
|
$15.20
|
|
|
Variable manufacturing overhead
|
$3.40
|
|
|
Fixed manufacturing overhead
|
|
$1,494,600
|
|
Variable selling and administrative expenses
|
$3.30
|
|
|
Fixed selling and administrative expenses
|
|
$1,464,700
|
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 94,000 units per year.
The company has invested $350,000 in this product and expects a return on investment of 16%.
What is the selling price based on the absorption costing approach.
$52.80
$80.18
$83.00
$50.91