Management of Great Springs Bottled 

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 Cost of goods sold Gross profit Expenses: Fuel/utility expense Wages expense Costs allocated from corporate Total expenses Operating income/(loss) in dollars Operating income/(loss) in percentage Transportation Bottling $285,000 87,864 $16,000 $3,200 43,080 57,300 17,235 15,000 $76,315 $75,500 % % Great Springs Bottled Water Company Income Statement (Market-based) Month Ending August 31, 20xx Sales Cost of goods sold Transportation Bottling $285,000 87,864 Gross profit Expenses: 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 Operating income/(loss) in percentage % %