Only Q3 Question 2Cranergy Products is a cranberry cooperative that operates two divisions, a harvestingdivision and a processing division. Currently, all of harvesting's output is converted intocranberry juice by the processing division, and the juice is sold to large beveragecompanies that produce cranberry juice blends. The processing division has a yield of500 gallons of juice per 1,000 pounds of cranberries. Cost and market price data for thetwo divisions are as follows:Harvesting DivisionVariable cost per pound ofcranberriesFixed cost per pound ofcranberriesSelling price per pound ofcranberries in outside market$0.14a.) 150% of full costb.) Market price$0.26$0.58Processing DivisionVariable cost per gallons ofjuice producedFixed cost per gallons of juiceSelling price per gallons ofjuice$0.32$0.50$2.15Required:1. Compute Cranergy's operating income from harvesting 420,000 pounds of cranberriesand processing them into juice.2. Cranergy rewards its division managers with a bonus equal to 3% of operating income.Compute the bonus earned by each division manager for each of the following transferpricing methods:3. Which transfer-pricing method will each division manager prefer? How mightCranergy resolve any conflicts that may arise on the issue of transfer pricing? Q21RevenueE: costHarvestingDivision cost( $0.14 + $0.26 ) x 4 200 00operating income(22Harvesting divisionProcessing Division cost( $0.32 + $0.5 ) × 420000 ÷ 1000×500 $172200Revenue2002x [(0.14+0.26) x103]Cust:Divtion Variable costs(42000x$0.14)Divisih Fixed costs(420000 x $0.26)Total division costsHarvesting Divixish Managerswith bonus 3%$42152$168000Processing DivisionRevenue(420000 ÷ 1000x500×42.15)CostiTransferred in costsDivision variable cost(420000 ÷ 1000 x 500 x 40.12)Fixed cust(420000 ÷ 1000×500 × $0.5)Total division costQ 23.150% of full cost24200058800109200$84000= $8400x390$352011150% of full Git$45150035200067200105000$415800Processing Divisish Mahayet = $27350×3%with bonus 390= $819,$421530(140200)$111300Market price243600(420000×40.59)58800(420000X$0,14)109200(420000×40.26)$75600= $7560x19= $22681Market Price$45150024360067200105000$424200= $75700x7%$13719

The cost that one division of a firm charges another division for goods and services rendered is…

Cranergy 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 500 gallons of juice per 1,000 pounds of cranberries. Cost and market price data for the two divisions are as follows: Harvesting Division Variable cost per pound of cranberries Fixed cost per pound of cranberries Selling price per pound of cranberries in outside market $0.14 $0.26 $0.58 Processing Division Variable cost per gallons of juice produced Fixed cost per gallons of juice Selling price per gallons of juice $0.32 $0.50 $2.15

Cranergy 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 500 gallons of juice per 1,000 pounds of cranberries. Cost and market price data for the two divisions are as follows: Harvesting Division Variable cost per pound of cranberries Fixed cost per pound of cranberries Selling price per pound of cranberries in outside market $0.14 $0.26 $0.58 Processing Division Variable cost per gallons of juice produced Fixed cost per gallons of juice Selling price per gallons of juice $0.32 $0.50 $2.15

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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