Perwin Corporation estimates that an investment of $800,000 would be needed to produce and sell 50,000 units of Product B each year. At this level of activity, the unit product cost would be $50. Selling and administrative expenses would total $400,000 each year. The company uses the absorption costing approach to cost-plus pricing described in the text. If a 20% rate of return on investment is desired, then the required markup for Product B would be closest to:
A. 26%
B. 22%
C. 24%
D. 20%
Answer: B
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