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Nancy Corporation Better Food Company Essay

  • Submitted by: lmt033
  • on September 3, 2013
  • Category: Miscellaneous
  • Length: 591 words

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Below is an essay on "Nancy Corporation Better Food Company" from Anti Essays, your source for research papers, essays, and term paper examples.

Here is your graded assignment for Week 5. There are two problems to complete, each containing three questions worth five points apiece. The full assignment is worth 30 points.You may want to work several of the exercises from our chapter readings this week to start. In addition, work several problems from this week's chapters in the graded Workout Room before attempting the Homework ES assignments. We will review several problems in the workout room. Problem 1 - Nancy Company has budgeted sales of $300,000 with the following budgeted costs: Direct materials $60,000 Direct manufacturing labor 40,000 Factory overheadVariable 30,000Fixed 50,000Selling and administrative expensesVariable 20,000Fixed 30,000Question 1: Compute the average markup percentage for setting prices as a percentage of the full cost of the product. (five points)60+40+30+50+20+30 = 230
300-230 = 70
70/230 = 30%Question 2: Compute the average markup percentage for setting prices as a percentage of the variable cost of the product. (five points)60+40+30+20 =
300-150 = 150
150/150 = 100%Question 3: Compute the average markup percentage for setting prices as a percentage of the variable manufacturing costs. (five points)60+40+30 = 130
300-130 = 170
170/130 = 131%Problem 2 - Better Food Company recently acquired an olive oil processing company that has an annual capacity of 2,000,000 liters and that processed and sold 1,400,000 liters last year at a market price of $4 per liter. The purpose of the acquisition was to furnish oil for the cooking division. The cooking division needs 800,000 liters of oil per year. It has been purchasing oil from suppliers at the market price. Production costs at capacity of the olive oil company, now a division, are as follows: Direct materials per liter | $1.00 |
Direct processing labor | 0.50 |
Variable processing overhead | 0.24 |
Fixed processing overhead | 0.40 |
Total | $2.14 |
Management is trying to decide what transfer price to use for sales from...

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