Assume you are the department B manager for Marley's Manufacturing. Marley's operates under a cost-based transfer structure. Assume you receive the majority of your raw materials from department A, which sells only to department B (they have no outside sales). The income statement for Marley's Manufacturing is shown below: Marley's Manufacturing Income Statement Month Ending August 31, 2018 Dept. A Dept. B Sales $22,000 $51,000 Cost of goods sold 10,340 26,520 Gross profit $11,660 $24,480 Utility expenses 880 3,060 Wages expense 5,720 10,710 Costs allocated from corporate 1,980 14,790 Total expenses $8,580 $28,560 Operating income/(loss) in dollars $3,080 -$4,080 Operating income/(loss) in percentage 14 % -8 % Assume the market price for the items your department purchase is 15% below what you are being charged by department A of Marley's Manufacturing. Determine the operating income for department B, assuming department A "sold" department B 1,000 units during the month and department A reduces the selling price to the market price. Round your percentage answer to one decimal place. New operating income/(loss) for department B in dollars New operating income/(loss) for department B in percentage
Assume you are the department B manager for Marley's Manufacturing. Marley's operates under a cost-based transfer structure. Assume you receive the majority of your raw materials from department A, which sells only to department B (they have no outside sales). The income statement for Marley's Manufacturing is shown below: Marley's Manufacturing Income Statement Month Ending August 31, 2018 Dept. A Dept. B Sales $22,000 $51,000 Cost of goods sold 10,340 26,520 Gross profit $11,660 $24,480 Utility expenses 880 3,060 Wages expense 5,720 10,710 Costs allocated from corporate 1,980 14,790 Total expenses $8,580 $28,560 Operating income/(loss) in dollars $3,080 -$4,080 Operating income/(loss) in percentage 14 % -8 % Assume the market price for the items your department purchase is 15% below what you are being charged by department A of Marley's Manufacturing. Determine the operating income for department B, assuming department A "sold" department B 1,000 units during the month and department A reduces the selling price to the market price. Round your percentage answer to one decimal place. New operating income/(loss) for department B in dollars New operating income/(loss) for department B in percentage
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ssume you are the department B manager for Marley's Manufacturing. Marley's operates under a cost-based transfer structure. Assume you receive the majority of your raw materials from department A, which sells only to department B (they have no outside sales).
The income statement for Marley's Manufacturing is shown below:
| Marley's Manufacturing Income Statement Month Ending August 31, 2018 |
Transcribed Image Text:Assume you are the department B manager for Marley's Manufacturing. Marley's operates under a cost-based transfer structure. Assume you receive the majority of your
raw materials from department A, which sells only to department B (they have no outside sales).
The income statement for Marley's Manufacturing is shown below:
Marley's Manufacturing
Income Statement
Month Ending August 31, 2018
Dept. A
Dept. B
Sales
$22,000
$51,000
Cost of goods sold
10,340
26,520
Gross profit
$11,660
$24,480
Utility expenses
880
3,060
Wages expense
5,720
10,710
Costs allocated from corporate
1,980
14,790
Total expenses
$8,580
$28,560
Operating income/(loss) in dollars
$3,080
-$4,080
Operating income/(loss) in percentage
14 %
-8 %
Assume the market price for the items your department purchase is 15% below what you are being charged by department A of Marley's Manufacturing.
Determine the operating income for department B, assuming department A "sold" department B 1,000 units during the month and department A reduces the selling price
to the market price. Round your percentage answer to one decimal place.
New operating income/(loss) for department B in dollars
New operating income/(loss) for department B in percentage
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