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Prior to 1997, PepsiCo, a major soft drink company, had a restaurant division consisting of Kentucky Fried Chicken, Taco Bell, and Pizza Hut. The only cola beverage these restaurants served was Pepsi. Assume that the major reason PepsiCo owned fast food restaurants is an attempt to increase its share of the cola market. Under this assumption, some Pizza Hut patrons who order a cola at the restaurant and are told they are drinking a Pepsi will switch and become Pepsi drinkers instead of Coke drinkers on other purchase occasions. However, studies have shown that some customers refuse to eat at restaurants unless they can get a Coke.
PepsiCo sells Pepsi Cola to non-PepsiCo restaurants at $0.53 per gallon. This is the market price of Pepsi-Cola. Pepsi-Cola's variable manufacturing cost is $0.09 per gallon and its total (fixed and variable) manufacturing cost is $0.22 per gallon. PepsiCo produces Pepsi-Cola in numerous plants located around the world. Plant capacity can be added in small increments (e.g., a half-million gallons per year). The cost of additional capacity is approximately equal to the fixed costs per gallon of $0.13.
Required: What transfer price should be set for Pepsi transferred from the soft drink division of PepsiCo to a PepsiCo restaurant such as Taco Bell? Justify your answer.
Which statement about operating leverage is true?
Compute Dow's earnings per share for the year ended December 31, 2011. (Do not round intermediate calculations. Round your answers to 2 decimal places.
What is the major source of the change in net assets that occurred in 2007 from the change that occurred in 2008? In your opinion, is this trend likely to continue? Why/why not?
Based on the information given above, what amount of cost of goods sold did ABC record in 2008?
Company ABC, is an exempt medical organization. XYZ, Inc., a sporting goods retailer, is a wholly owned subsidiary of Company ABC. Company ABC inherited the XYZ stock last year from a major benefactor of the medical organization. XYZ's taxable inc..
What other factors should the owner consider before making the final decision to purchase the machine?
Betsy receives a salary of $50,000 from her employer (a retail clothing store) and several fringe benefits. Her employer pays premiums of $300 for her $40,000 group term life insurance coverage and pays $2,400 for medical insurance premiums.
ABC Corp. owns a piece of land and building a few miles from its headquarters. The land originally cost ABC $500,000 to purchase.
How do management's responsibilities and the auditors' responsibilities differ in terms of the financial statements presented?
Explain how shaving 5% off the estimated direct labor hours in the base of the predetermined overhead rate usually results in a big boost in the net operating income at the end of the year.
An analysis of the general ledger accounts indicates that equipment, which had cost $37,000 and on which accumulated depreciation totaled $32,000 on the date of sale, was sold for $8,000 during the year.
The Bird Toy Company manufactures a line of dolls and a doll dress sewing kit. Demand for the dolls is increasing, and management requests assistance from you in determining an economical sales and production mix for the coming year.
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