Cerveza Manufacturing is considering producing a new product. Cerveza Manufacturing expects that it will sell...
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Accounting
Cerveza Manufacturing is considering producing a new product. Cerveza Manufacturing expects that it will sell 12,000 units over the product's expected 4-year life. Variable production costs and variable selling costs are estimated at $42 and $16 per unit, respectively. Annual fixed production and fixed selling costs are estimated at $15,000 and $5,000, respectively. Research and development costs are estimated at $184,000. If the product sells for $92 per unit, the average target markup for selling prices using absorption costing approach is:
| 1. | 87% | |
| 2. | 15% | |
| 3. | 13% | |
| 4. | 667% |
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