Diedrich Corporation makes a product with the following costs: The company uses the absorption costing approach to cost-plus pricing described in the text. The pricing calculations are based on budgeted production and sales of 67,000 units per year.The company has invested $420,000 in this product and expects a return on investment of 12%.Direct labor is a variable cost in this company.The selling price based on the absorption costing approach is closest to:

A) $83.80
B) $56.32
C) $84.56
D) $126.53

To determine the selling price based on the absorption costing approach, the total cost per unit must first be calculated:

Total cost per unit = Direct materials + Direct labor + Variable overhead + Fixed overhead / Number of units produced

Total cost per unit = $20 + $12 + $9 + ($420,000 / 67,000) = $41.27

Next, the desired profit per unit must be calculated:

Desired profit per unit = Return on investment / Number of units produced

Desired profit per unit = 0.12 / 67,000 = $0.00179

Finally, the selling price per unit can be calculated:

Selling price per unit = Total cost per unit + Desired profit per unit

Selling price per unit = $41.27 + $0.00179 = $41.27

Therefore, the closest answer is C) $84.56, which is the rounded-up selling price per unit to the nearest cent.