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When only required ROI will be achieved?

If you believe in the statement, “The company’s desired return on investment will be attained regardless of how many units are actually sold when the formula for the markup percentage on absorption cost is used when setting prices,” you will in incorrect position.

Recall that the formula for the markup percentage on absorption cost is as follows:

                           (Required ROI x Investment) + Selling, General & Admin expenses
                           Unit sales x Unit product cost

Because unit sales are a component of this formula, the required ROI will be attained only if the forecasted unit sales volume is attained.
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