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: None of the answers is correct. $38. $45. $57. $30.

Answer 1

Answer:

the company's markup percentage would be computed on the basis of: $45

Explanation:

Absorption Costing Treats Both the Variable and Fixed Manufacturing Costs as Product Costs.Non- Manufacturing Cost are treated as Period Costs or Expenses in period in which they are incurred.

Absorption manufacturing-cost pricing formulas establishes the selling prices of items by adding a mark-up on top of the absorption cost.

Absorption Cost Calculation for Product Costing is as follows :

Variable manufacturing cost     $30

Fixed manufacturing overhead $15

Total Cost                                   $45