Gage corporation has two operating divisions in a semiautonomous organizational structure. adams division, located in the united states, produces a specialized electrical component that is an input to bute division, located in the south of england. adams uses idle capacity to produce the component, which has a domestic market price of $11. its variable costs are $6 per unit. gage’s u. s. tax rate is 40 percent of income. in addition to the transfer price for each component received from adams, bute pays a $4 per unit shipping fee. the component becomes a part of its assembled product, which costs an additional $2 to produce and sells for an equivalent of $22. bute could purchase the component from a manchester (england) supplier for $11 per unit. gage’s english tax rate is 60 percent of income. assume that english tax laws permit transferring at either variable cost or market price.

requirements:

a-1. what are the respective profits after tax for both the adams division and bute division of gage if the transfer price is $6. (round your answers to 2 decimal places.)

a-2. what are the respective profits after tax for both the adams division and bute division of gage if the transfer price is $11. (round your answers to 2 decimal places.)

a-3. what transfer price is economically optimal for gage corporation? option 1: the transfer price economically optimal for gage corporation is $6 per unit. option 2: the transfer price economically optimal for gage corporation is $11 per unit.

Alpha company uses the periodic inventory system for purchase & sales of merchandise. discount terms for both purchases & sales are, 2/10, n30 and the gross method is used. unless otherwise noted, fob destination will apply to all purchases & sales. the value of inventory is based on periodic system. on january 1, 2016, beginning inventory consisted of 350 units of widgets costing $10 each. alpha prepares monthly income statements. the following events occurred during the month of jan.: dateactivitya.jan. 3purchased on account 350 widgets for $11 each.b.jan. 5sold on account 400 widgets for $30 each. paid freight out with petty cash of $150.c.jan. 10purchased on account 625 widgets for $12 each.d.jan. 11shipping cost for the january 10 purchased merchandise was $400 was paid with a cheque by alpha directly to the freight company.e.jan. 12returned 50 widgets received from jan. 10 purchase as they were not the correct item ordered.f.jan. 13paid for the purchases made on jan. 3.g.jan. 21sold on account 550 widgets for $30 each. paid freight out with petty cash of $250.h.jan. 22authorize credit without return of goods for 50 widgets sold on jan. 21 when customer advised that they were received in defective condition.i.jan. 25received payment for the sale made on jan. 5.j.jan. 26paid for the purchases made on jan. 10.k.jan. 31received payment for the sale made on jan. 21.use this information to prepare the general journal entries (without explanation) for the january events. if no entry is required then enter the date and write "no entry required."