Management of Great Springs Bottled Water Company has asked you, the controller, to develop a transfer pricing system for the company. The Transportation Department of the company sells all of its product to the Bottling Department of the company. Thus the Transportation Department's sales become the Bottling Department's cost of goods sold. In order to determine an optimal transfer pricing system, management would like you to demonstrate what an income statement would look like under a cost, market, and negotiated transfer pricing structure. These various transfer prices are listed below. Cost-based $0.62 Market-based $0.73 Negotiated $0.70 Gallons transferred 277,000 Prepare an income statement for each of the transfer prices by filling in the missing numbers in the provided income statement based on each transfer price and calculate the operating income/loss percentage. Round your answers to the nearest whole number. Great Springs Bottled Water Company Income Statement (Cost-based) Month Ending August 31, 20xx Transportation Bottling Sales $fill in the blank 1 $286,000 Cost of goods sold 89,305 fill in the blank 2 Gross profit $fill in the blank 3 $fill in the blank 4 Expenses: Fuel/utility expense $14,000 $3,200 Wages expense 43,090 57,100 Costs allocated from corporate 17,237 15,000 Total expenses $74,327 $75,300 Operating income/(loss) in dollars $fill in the blank 5 $fill in the blank 6 Operating income/(loss) in percentage fill in the blank 7 % fill in the blank 8 % Great Springs Bottled Water Company Income Statement (Market-based) Month Ending August 31, 20xx Transportation Bottling Sales $fill in the blank 9 $286,000 Cost of goods sold 89,305 fill in the blank 10 Gross profit $fill in the blank 11 $fill in the blank 12 Expenses: Fuel/utility expense $14,000 $3,200 Wages expense 43,090 57,100 Costs allocated from corporate 17,237 15,000 Total expenses $74,327 $75,300 Operating income/(loss) in dollars $fill in the blank 13 $fill in the blank 14 Operating income/(loss) in percentage fill in the blank 15 % fill in the blank 16 % Great Springs Bottled Water Company Income Statement (Negotiated) Month Ending August 31, 20xx Transportation Bottling Sales $fill in the blank 17 $286,000 Cost of goods sold 89,305 fill in the blank 18 Gross profit $fill in the blank 19 $fill in the blank 20 Expenses: Fuel/utility expense $14,000 $3,200 Wages expense 43,090 57,100 Costs allocated from corporate 17,237 15,000 Total expenses $74,327 $75,300 Operating income/(loss) in dollars $fill in the blank 21 $fill in the blank 22 Operating income/(loss) in percentage fill in the blank 23 % fill in the blank 24 %

Management of Great Springs Bottled Water Company has asked you, the controller, to develop a transfer pricing system for the company. The Transportation Department of the company sells all of its product to the Bottling Department of the company. Thus the Transportation Department's sales become the Bottling Department's cost of goods sold. In order to determine an optimal transfer pricing system, management would like you to demonstrate what an income statement would look like under a cost, market, and negotiated transfer pricing structure. These various transfer prices are listed below. Cost-based $0.62 Market-based $0.73 Negotiated $0.70 Gallons transferred 277,000 Prepare an income statement for each of the transfer prices by filling in the missing numbers in the provided income statement based on each transfer price and calculate the operating income/loss percentage. Round your answers to the nearest whole number. Great Springs Bottled Water Company Income Statement (Cost-based) Month Ending August 31, 20xx Transportation Bottling Sales $fill in the blank 1 $286,000 Cost of goods sold 89,305 fill in the blank 2 Gross profit $fill in the blank 3 $fill in the blank 4 Expenses: Fuel/utility expense $14,000 $3,200 Wages expense 43,090 57,100 Costs allocated from corporate 17,237 15,000 Total expenses $74,327 $75,300 Operating income/(loss) in dollars $fill in the blank 5 $fill in the blank 6 Operating income/(loss) in percentage fill in the blank 7 % fill in the blank 8 % Great Springs Bottled Water Company Income Statement (Market-based) Month Ending August 31, 20xx Transportation Bottling Sales $fill in the blank 9 $286,000 Cost of goods sold 89,305 fill in the blank 10 Gross profit $fill in the blank 11 $fill in the blank 12 Expenses: Fuel/utility expense $14,000 $3,200 Wages expense 43,090 57,100 Costs allocated from corporate 17,237 15,000 Total expenses $74,327 $75,300 Operating income/(loss) in dollars $fill in the blank 13 $fill in the blank 14 Operating income/(loss) in percentage fill in the blank 15 % fill in the blank 16 % Great Springs Bottled Water Company Income Statement (Negotiated) Month Ending August 31, 20xx Transportation Bottling Sales $fill in the blank 17 $286,000 Cost of goods sold 89,305 fill in the blank 18 Gross profit $fill in the blank 19 $fill in the blank 20 Expenses: Fuel/utility expense $14,000 $3,200 Wages expense 43,090 57,100 Costs allocated from corporate 17,237 15,000 Total expenses $74,327 $75,300 Operating income/(loss) in dollars $fill in the blank 21 $fill in the blank 22 Operating income/(loss) in percentage fill in the blank 23 % fill in the blank 24 %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Cost-based	$0.62
Market-based	$0.73
Negotiated	$0.70
Gallons transferred	277,000

Prepare an income statement for each of the transfer prices by filling in the missing numbers in the provided income statement based on each transfer price and calculate the operating income/loss percentage. Round your answers to the nearest whole number.

Great Springs Bottled Water Company Income Statement (Cost-based) Month Ending August 31, 20xx
	Transportation	Bottling
Sales	$fill in the blank 1		$286,000
Cost of goods sold	89,305		fill in the blank 2
Gross profit	$fill in the blank 3		$fill in the blank 4
Expenses:
Fuel/utility expense	$14,000		$3,200
Wages expense	43,090		57,100
Costs allocated from corporate	17,237		15,000
Total expenses	$74,327		$75,300
Operating income/(loss) in dollars	$fill in the blank 5		$fill in the blank 6
Operating income/(loss) in percentage	fill in the blank 7	%	fill in the blank 8	%

Great Springs Bottled Water Company Income Statement (Market-based) Month Ending August 31, 20xx
	Transportation	Bottling
Sales	$fill in the blank 9		$286,000
Cost of goods sold	89,305		fill in the blank 10
Gross profit	$fill in the blank 11		$fill in the blank 12
Expenses:
Fuel/utility expense	$14,000		$3,200
Wages expense	43,090		57,100
Costs allocated from corporate	17,237		15,000
Total expenses	$74,327		$75,300
Operating income/(loss) in dollars	$fill in the blank 13		$fill in the blank 14
Operating income/(loss) in percentage	fill in the blank 15	%	fill in the blank 16	%

Great Springs Bottled Water Company Income Statement (Negotiated) Month Ending August 31, 20xx
	Transportation	Bottling
Sales	$fill in the blank 17		$286,000
Cost of goods sold	89,305		fill in the blank 18
Gross profit	$fill in the blank 19		$fill in the blank 20
Expenses:
Fuel/utility expense	$14,000		$3,200
Wages expense	43,090		57,100
Costs allocated from corporate	17,237		15,000
Total expenses	$74,327		$75,300
Operating income/(loss) in dollars	$fill in the blank 21		$fill in the blank 22
Operating income/(loss) in percentage	fill in the blank 23	%	fill in the blank 24	%

Transportation
Bottiing
Sales
$286,000
Cost of goods sold
89,305
Gross profit
$
Expenses:
Fuel/utility expense
$14,000
$3,200
Wages expense
43,090
57,100
Costs allocated from corporate
17,237
15,000
Total expenses
$74,327
$75,300
Operating income/(loss) in dollars
Operating income/(loss) in percentage
%
%
Great Springs Bottled Water Company
Income Statement (Negotiated)
Month Ending August 31, 20xx
Transportation
Bottling
Sales
$286,000
Cost of goods sold
89,305
Gross profit
Expenses:
Fuel/utility expense
$14,000
$3,200
Wages expense
43,090
57,100
Costs allocated from corporate
17,237
15,000
Total expenses
$74,327
$75,300

Management of Great Springs Bottled Water Company has asked you, the controller, to develop a transfer pricing system for the company. The Transportation Department
of the company sells all of its product to the Bottling Department of the company. Thus the Transportation Department's sales become the Bottling Department's cost of
goods sold. In order to determine an optimal transfer pricing system, management would like you to demonstrate what an income statement would look like under a cost,
market, and negotiated transfer pricing structure. These various transfer prices are listed below.
Cost-based
$0.62
Market-based
$0.73
Negotiated
$0.70
Gallons transferred
277,000
Prepare an income statement for each of the transfer prices by filling in the missing numbers in the provided income statement based on each transfer price and calculate
he operating income/loss percentage. Round your answers to the nearest
number
Great Springs Bottled Water Company
Income Statement (Cost-based)
Month Ending August 31, 20xx
Transportation
Bottling
Sales
2$
$286,000
Cost of goods sold
89,305
Gross profit
$4
Expenses:
Fuel/utility expense
$14,000
$3,200
Wages expense
43,090
57,100
Costs allocated from corporate
17,237
15,000
Total expenses
$74,327
$75,300
Operating income/(loss) in dollars
$
Operating income/(loss) in percentage
%

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 7 steps with 6 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.