A business adds 20% to the total cost of all its products in order to work out a selling price. Each unit of product requires 4 hours of direct labour and 2 kilos of direct material. The correct overhead absorption rate to apply is $8 per direct labour hour. However, the book-keeper incorrectly applied a rate of $13 per direct labour hour. What was the effect of this error on the selling price of one unit of the product?
- A$5
- B$12
- C$20
- D$24