The management of Musselman Corporation would like to set the selling price on a new product using the absorption costing approach to cost-plus pricing. The company's accounting department has supplied the following estimates for the new product: Per UnitPer YearDirect materials$27 Direct labor$16 Variable manufacturing overhead$8 Fixed annual manufacturing overhead $216,000 Variable selling and administrative expenses$3 Fixed annual selling and administrative expenses $72,000 Management plans to produce and sell 9,000 units of the new product annually. The new product would require an investment of $1,305,000 and has a required return on investment of 10%. The markup percentage on absorption cost is closest to:
A. 25%
B. 10%
C. 34%
D. 15%
Answer: C
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