Assume for the question that NoFat rejected PU's special sales offer because the $2.20 price suggested...

 

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Assume for the question that NoFat rejected PU's special sales offer because the $2.20 price suggested by PU was too low. In response to the rejection, PU asked NoFat to determine the price of which it would be willing to accept the special sales offer. For its regular sales, NoFat sets prices by marking up variable costs by 10%. 4. 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. Assume for the question that NoFat rejected PU's special sales offer because the $2.20 price suggested by PU was too low. In response to the rejection, PU asked NoFat to determine the price of which it would be willing to accept the special sales offer. For its regular sales, NoFat sets prices by marking up variable costs by 10%. 4. 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.

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