Ch 9 HW

Question 3

The following information is from Bluff Run Golf Courses. The company runs three courses and the July income statement for each course is as follows:

BLUFF RUN GOLF COURSES
Income Statement
Month Ending July 31, 2018
	Blue Course		Black Course		Gold Course
Revenues
Greens fees revenue	$62,500		$89,000		$42,700
Outings revenue	?		6,000		29,000
Total revenue	$73,800		$95,000		$71,700
Expenses
Landscaping	$7,800		$14,200		$6,500
Wages	43,900		?		32,700
Repairs and maintenance	5,600		2,600		4,300
Fuel	3,100		3,000		1,970
Utilities	1,800		3,000		1,600
Total expenses	$62,200		$79,600		$47,070
Operating income	$11,600		$15,400		?

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A. Calculate the operating income percentage for each of the courses. Round your percentages to one decimal place.

Course Blue	fill in the blank ec58cc057fa7fdb_1%
Course Black	fill in the blank ec58cc057fa7fdb_2%
Course Gold	fill in the blank ec58cc057fa7fdb_3%

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Feedback

A. The percentage calculation involves the operating income as a function of total revenue.

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B.

1. Perform a vertical analysis for each course. Round your percentages to one decimal place.

Bluff Run Golf Courses Income Statement Month Ending July 31, 2018

------------	Course Blue	------------	Course Black	------------	Course Gold	------------
Revenues	-----------	-------------	---------------	----------------	---------------	------------
Greens fees revenue	$62,500	-------------	$89,000	----------------	$42,700	------------
Outings revenue	_______	--------------	6,000	---------------	29,000	------------
Total revenue	$73,800	----------------	$95,000	---------------	$71,700	------------
Expenses	---------------	---------------	---------------	----------------	----------------	------------
Landscaping	$7,800	________%	$14,200	_______%	$6,500	______%
Wages	43,900	________%		_______%	32,700	______%
Repairs and maintenance	5,600	________%	2,600	_______%	4,300	______%
Fuel	3,100	________%	3,000	_______%	1,970	______%
Utilities	1,800	________%	3,000	_______%	1,600	______%
Total expenses	$62200	---------------	$79600	--------------	$47070	------------
Operating income	$11,600	----------------	$15,400	--------------	$	------------
Operating income %	______%	----------------	_______%	--------------	________%	------------

Question 4

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		$287,000
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	$15,000		$3,100
Wages expense	43,090		57,200
Costs allocated from corporate	17,236		15,000
Total expenses	$75,326		$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		$287,000
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	$15,000		$3,100
Wages expense	43,090		57,200
Costs allocated from corporate	17,236		15,000
Total expenses	$75,326		$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	$		$287,000
Cost of goods sold	89,305
Gross profit	$		$
Expenses:	-----------		-----------
Fuel/utility expense	$15,000		$3,100
Wages expense	43,090		57,200
Costs allocated from corporate	17,236		15,000
Total expenses	$75,326		$75,300
Operating income/(loss) in dollars	$		$
Operating income/(loss) in percentage		%		%