Question

The following costs relate to Tower Company:

Variable manufacturing cost, $30; variable selling and administrative cost, $8; applied fixed manufacturing overhead, $15; and allocated fixed selling and administrative cost, $4.
If Tower uses absorption manufacturing-cost pricing formulas, the company's markup percentage would be computed on the basis of:

A)$30. B) $38. C) $45. D) $57. E) some other amount.

Answer 1

The correct answer is C.

Step-by-step explanation:

Giving the following information:

Variable manufacturing cost, $30

Applied fixed manufacturing overhead, $15

Under the absorption costing method, the unitary product cost is calculated using the variable manufacturing cost and allocated fixed overhead.

Unitary product cost= 30 + 15= $45