Name:
Section:
Score: 0%
Key Code:
1. Would the market price of $60 per unit be an appropriate transfer price for Pendray Scientific Inc.?
2.
3.
GPS
4.
Number of Units Transfer or Variable Cost
Transferred Market Price Per Unit
GPS Systems Division
Communication Systems Division
Total company income
5. a.
Maximum acceptable transfer price
Increase in
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Problem 14-6
Instructions
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Increase in
Income from
Operations
 (
–
) =
2
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Communication
Transferred Market Price Per Unit
 (
–
) =
Name:
Section:
Score: See student sheet for student’s score
Scoring:
1. Would the market price of $60 per unit be an appropriate transfer price for Pendray Scientific Inc.? Explain.
2.
3.
GPS
Systems Total
Sales:
75,000 units $60 per unit 4,500,000$ 4,500,000$
25,000 units $52 per unit 1,300,000 1,300,000
140,000 units $115 per unit 16,100,000$ 16,100,000
100,000 units $40 per unit 4,000,000$ 4,000,000$
25,000 units $82 per unit 2,050,000$ 2,050,000
115,000 units $90 per unit 10,350,000 10,350,000
4.
Number of Units Transfer or Variable Cost
Transferred Market Price Per Unit
GPS Systems Division 25,000 $49 $40 $225,000
Communication Systems Division 25,000 $60 $49 $275,000
Total company income 25,000 $60 $40 $500,000
Problem 14-6
Instructions
SOLUTION
ON
Increase in
For the Year Ended December 31, 20Y5
PENDRAY SCIENTIFIC, INC.
Divisional Income Statements
Increase in
Income from
Operations
 (
–
) =
Communication
Systems
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Transferred Market Price Per Unit
) =
 (
–
Name:
Section:
Score: 0%
Key Code:
Revenues
Cost of goods sold
Exercise 14-7
Instructions
2
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Divisional Income Statements
For the Year Ended December 31, 20Y7
Wholesale Division
Retail Division
POWER SPORTS COMPANY
Name:
Section:
Score: See student sheet for student’s score
Scoring:
Revenues 24,600,000$ ##########
Divisional Income Statements
For the Year Ended December 31, 20Y7
Wholesale Division
Retail Division
Exercise 14-7
SOLUTION
POWER SPORTS COMPANY
Instructions
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ON
Name:
Section:
Score: 6%
*Since some answer boxes are correct when left blank (zero), the beginning score is greater than 0%.
Key Code:
a.
b.
Revenues
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2
Exercise 14-8
Instructions
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PANDA AIRLINES, INC.
Divisional Income Statements
For the Year Ended April 30, 20Y9
Passenger Division
Cargo Division
Name:
Section:
Score: See student sheet for student’s score
Scoring:
*Since some answer boxes are correct when left blank, the beginning score is greater than 0%.
a.
Instructions
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Exercise 14-8
SOLUTION
Because service department charges are inappropriately based on revenue, the reported division income does not adequately
measure performance.
ON
Name:
Section:
Score: 0%
Key Code:
Action Sports
Division
Team Sports
Division
Sales
Cost of goods sold
Gross profit
Action Sports
Division
Team Sports
Division
Total
Advertising expense
Transportation rate per bill of lading
Number of bills of lading
Transportation expense
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2
Exercise 14-9
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Supporting Schedule
Service Department Charges
ON-DEMAND SPORTS CO.
Divisional Income Statements
For the Year Ended November 30, 20Y1
Instructions
Name:
Section:
Score: See student sheet for student’s score
Scoring:
Action Sports
Division
Team Sports
Division
Sales 18,500,000$ 30,600,000$
Cost of goods sold 10,700,000 19,200,000
Gross profit 7,800,000$ 11,400,000$
Divisional selling expense 1,500,000 2,100,000
Divisional administrative expense 1,250,000 1,450,000
Action Sports
Division
Team Sports
Division
Total
Advertising expense 1,200,000$ 1,800,000$ 3,000,000$
Transportation rate per bill of lading 18.50$ 18.50$
Number of bills of lading 14,000 21,400
Transportation expense 259,000$ 395,900$ 654,900$
Exercise 14-9
SOLUTION
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Instructions
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ON
Supporting Schedule
Service Department Charges
ON-DEMAND SPORTS CO.
Divisional Income Statements
For the Year Ended November 30, 20Y1
Name:
Section:
Score: 0%
Key Code:
a.
Invested
Assets =
Sporting Goods Division
Income from
Operations
Rate of
Return
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Exercise 14-10
Instructions
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2
Name:
Section:
Score:
See student sheet for student’s score
Scoring:
a.
Invested
Assets =
Sporting Goods Division 270,000$ 1,500,000$ 18%
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Income from
Operations
Rate of
Return
Exercise 14-10
SOLUTION
Instructions
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ON