{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-05-26T03:06:54-04:00", "answer_date": "2024-05-26 03:06:54", "is_docs_available": "", "is_excel_available": "", "is_pdf_available": "", "count_file_available": 0, "main_page": "student_question_view", "question_id": "1721592", "url": "\/study-help\/questions\/management-of-great-springs-bottled-water-company-has-asked-you-1721592", "question_creation_date_js": "2024-05-26T03:06:54-04:00", "question_creation_date": "May 26, 2024 03:06 AM", "meta_title": "[Solved] Management of Great Springs Bottled Water | SolutionInn", "meta_description": "Answer of - Management of Great Springs Bottled Water Company has asked you, the controller, to develop a transfer pricing system | SolutionInn", "meta_keywords": "management,great,springs,bottled,water,company,asked,controller,develop,transfer,pricing,system", "question_title_h1": " Management of Great Springs Bottled Water Company has asked you, the controller, to develop a transfer pricing system for the company. The Transportation Department", "question_title": " Management of Great Springs Bottled Water Company has asked you, the", "question_title_for_js_snippet": "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 Market based Negotiated Gallons transferred $0 61 $0 74 $0 70 277,000 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 Sales Transportation 168,970 Bottling $285,000 Cost of goods sold 87,864 168,970 $ 81,106 $116,030 Gross profit Expenses Fuel utility expense Wages expense $16,000 $3,200 43,080 57,300 Costs allocated from corporate 17,235 15,000 Total expenses $76,315 $75,500 Operating income (loss) in dollars $ 4,791 40,530 Operating income (loss) in percentage 2 84 X 14 22 Sales Cost of goods sold Gross profit Great Springs Bottled Water Company Income Statement (Market based) Month Ending August 31, 20xx Transportation Bottling $204,980 $285,000 87,864 204,980 x 117,116 80,020 Expenses Fuel utility expense Wages expense Costs allocated from corporate Total expenses Operating income (loss) in dollars $16,000 $3,200 43,080 57,300 17,235 $76,315 15,000 $75,500 40,801 4,520 Operating income (loss) in percentage 19 90 X 1 59 Sales Great Springs Bottled Water Company Income Statement (Negotiated) Month Ending August 31, 20xx Transportation Bottling $193,900 $285,000 Sales Cost of goods sold Gross profit Expenses Great Springs Bottled Water Company Income Statement (Negotiated) Month Ending August 31, 20xx Transportation Bottling 193,900 $285,000 87,864 193,900 X 106,036 91,100 Fuel utility expense $16,000 $3,200 Wages expense 43,080 57,300 Costs allocated from corporate 17,235 15,000 Total expenses $76,315 $75,500 Operating income (loss) in dollars 29,721 15,600 Operating income (loss) in percentage 15 33 X 5 47 X Which of the following statements best describes your results a The operating income of the transportation division will be higher than the operating income of the bottling division under all three transfer pricing systems b The operating income of the transportation division will be higher than the operating income of the bottling division under the cost based and market based transfer pricing systems only c The operating income of the transportation division will be higher than the operating income of the bottling division under the cost based and negotiated transfer pricing systems only d The operating income of the transportation division will be higher than the operating income of the bottling division under the negotiated and market based transfer pricing systems only Feedback Check My Work The sales amount is a function of the transfer rate and the gallons transferred Check My Work Previous Next", "question_description": "\"image\"image", "transcribed_text": "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 Market-based Negotiated Gallons transferred $0.61 $0.74 $0.70 277,000 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 Sales Transportation 168,970 Bottling $285,000 Cost of goods sold 87,864 168,970 $ 81,106 $116,030 Gross profit Expenses: Fuel\/utility expense Wages expense $16,000 $3,200 43,080 57,300 Costs allocated from corporate 17,235 15,000 Total expenses $76,315 $75,500 Operating income\/(loss) in dollars $ 4,791 40,530 Operating income\/(loss) in percentage 2.84 X % 14.22 Sales Cost of goods sold Gross profit Great Springs Bottled Water Company Income Statement (Market-based) Month Ending August 31, 20xx Transportation Bottling $204,980 $285,000 87,864 204,980 x 117,116 80,020 Expenses: Fuel\/utility expense Wages expense Costs allocated from corporate Total expenses Operating income\/(loss) in dollars $16,000 $3,200 43,080 57,300 17,235 $76,315 15,000 $75,500 40,801 4,520 Operating income\/(loss) in percentage 19.90 X % 1.59 Sales Great Springs Bottled Water Company Income Statement (Negotiated) Month Ending August 31, 20xx Transportation Bottling $193,900 $285,000 Sales Cost of goods sold Gross profit Expenses: Great Springs Bottled Water Company Income Statement (Negotiated) Month Ending August 31, 20xx Transportation Bottling 193,900 $285,000 87,864 193,900 X 106,036 91,100 Fuel\/utility expense $16,000 $3,200 Wages expense 43,080 57,300 Costs allocated from corporate 17,235 15,000 Total expenses $76,315 $75,500 Operating income\/(loss) in dollars 29,721 15,600 Operating income\/(loss) in percentage 15.33 X % 5.47 X % Which of the following statements best describes your results? a. The operating income of the transportation division will be higher than the operating income of the bottling division under all three transfer pricing systems. b. The operating income of the transportation division will be higher than the operating income of the bottling division under the cost-based and market-based transfer pricing systems only. c. The operating income of the transportation division will be higher than the operating income of the bottling division under the cost-based and negotiated transfer pricing systems only. d. The operating income of the transportation division will be higher than the operating income of the bottling division under the negotiated and market-based transfer pricing systems only. Feedback Check My Work The sales amount is a function of the transfer rate and the gallons transferred. Check My Work Previous Next", "related_book": { "title": "Accounting Principles", "isbn": "1119491630, 978-1119491637, 978-0470534793", "edition": "10th Edition", "authors": "Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/54.jpg", "uri": "\/textbooks\/accounting-principles-10th-edition-54", "see_more_uri": "" }, "free_related_book": { "isbn": "0198551681", "uri": "\/textbooks\/atoms-in-molecules-a-quantum-theory-1st-edition-9780198551683", "name": "Atoms In Molecules A Quantum Theory", "edition": "1st Edition" }, "question_posted": "2024-05-26 03:06:54", "see_more_questions_link": "\/study-help\/questions\/business-finance-2024-September-22", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/test-rocket-is-launched-by-accelerating", "description": "A test rocket is launched by accelerating it along a 200.0-m incline at 1.25 m\/s2 starting from rest at point A (Figure 3.45.) 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