Cornerstones of Managerial Accounting 4th Edition by Maryanne Mowen, Don Hansen, Dan Heitger

Exercise 13

If Allyson decides to use NoFat's 10% mark-up pricing method to set the price for PU's special sales offer,
a. Calculate the price that NoFat would charge PU for each pound of olestra.
b. Calculate the relevant profit that NoFat would earn if it set the special sales price by using its mark-up pricing method. (Hint: Use the estimate of relevant costs that you calculated in response to Requirement 1b.)
c. Explain why NoFat should accept or reject the special sales offer if it uses its mark-up pricing method to set the special sales price.