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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 $23,000 $50,000 Cost of goods sold 10,810 26,500 Gross profit $12,190 $23,500 Utility expenses 1,380 3,500 Wages expense 5,520 10,000 Costs allocated from corporate 2,300 14,500 Total expenses $9,200 $28,000 Operating income/(loss) in dollars $2,990 -$4,500 Operating income/(loss) in percentage 13 % -9 % 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 $23,000 $50,000 Cost of goods sold 10,810 26,500 Gross profit $12,190 $23,500 Utility expenses 1,380 3,500 Wages expense 5,520 10,000 Costs allocated from corporate 2,300 14,500 Total expenses $9,200 $28,000 Operating income/(loss) in dollars $2,990 -$4,500 Operating income/(loss) in percentage 13 % -9 % 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 %

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $23,000 $50,000 Cost of goods sold 10,810 26,500 Gross profit $12,190 $23,500 Utility expenses 1,380 3,500 Wages expense 5,520 10,000 Costs allocated from corporate 2,300 14,500 Total expenses $9,200 $28,000 Operating income/(loss) in dollars $2,990 -$4,500 Operating income/(loss) in percentage 13 % -9 % 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 %
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 $23,000 $50,000 Cost of goods sold 10,810 26,500 Gross profit $12,190 $23,500 Utility expenses 1,380 3,500 Wages expense 5,520 10,000 Costs allocated from corporate 2,300 14,500 Total expenses $9,200 $28,000 Operating income/(loss) in dollars $2,990 -$4,500 Operating income/(loss) in percentage 13 % -9 % 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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