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Please calculate requirement 2 and 3 with step by step calculation Cran Boost Products is a cranberry cooperative that operates two divisions: a harvesting division
Please calculate requirement 2 and 3 with step by step calculation
Cran Boost Products is a cranberry cooperative that operates two divisions: a harvesting division and a processing division. Currently, all of harvesting's output is converted into cranberry juice by the processing division, and the juice is sold to large beverage companies that produce cranberry juice blends. The processing division has a yield of 1,700 litres of juice per 1,000 kilograms of cranberries. Cost and market price data for the two divisions are as follows: (Click the icon to view the division data.) Required 1. Compute Cran Boost's operating income from harvesting 400,000 kilograms of cranberries during June and processing them into juice. 2. Cran Boost rewards its division managers with a bonus equal to 4% of operating income. Compute the bonus earned by each division manager in June for each of the following transfer-pricing methods: a. 150% of full cost b. Market price 3. Which transfer-pricing method will each division manager prefer? How might Cran Boost resolve any conflicts that may arise on the issue of transfer pricing? Data table Requirement 2. Cran Boost rewards its division managers with a bonus equal to 4% of operating income. Compute the bonus earned by each division manager in June for each transfer-pricing method, (a) 150\% of costs and (b) market price. (Round the revenue per kilogram to four decimal places. Round final answers to the nearest whole dollar. If the bonus is negative, enter a zero since no bonus would be paid. Use a minus sign or parentheses for any operating losses.)Step by Step Solution
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