Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Management of Green Peak Tea Company has asked you, the controller, to develop a transfer pricing system for the company. The Brewing Department of the
Management of Green Peak Tea Company has asked you, the controller, to develop a transfer pricing system for the company. The Brewing Department of the company seris all of its product to the Bottling Department of the company. Thus the Brewing 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. 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 (thus four different income statements) and calculate the operating income/loss percentage (Round the % to the nearest whole number, no decimals). Cost-based Market-based Negotiated Gallons transferred $ 1.32 $ 1.15 $ 1.24 89,000 Green Peak Tea Company Income Statement Month Ended November 30, 2018 Brewing Bottling $ 207,000 61,090 Sales Cost of good sold Gross Profit Fuel/utilities expense Wages expense Costs allocated from corporate Total expenses Operating income/(loss) $ Operating income/(loss) % 6,000 22,180 11,748 39,928 5,400 41,400 28,000 74,800
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started