LO 9.4Assume 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). After calculating the operating income in dollars and operating income in percentage, analyze the following financial information to determine costs that may need further investigation **MARLEY'S MANUFACTURING** **Income Statement** *Month Ending August 31, 2018* | | Dept A | Dept B ||--------------------------|------------|------------|| **Sales** | $22,000 | $51,000 || **Cost of goods sold** | 10,560 | 26,520 || **Gross profit** | $11,440 | $24,480 || | | || **Expenses** | | || Utility expenses | 1,000 | 3,200 || Wages expense | 5,500 | 10,200 || Costs allocated from corporate | 2,200 | 15,000 || **Total expenses** | $8,700 | $28,400 || | | || **Operating income/(loss) $** | ? | ? || **Operating income/(loss) %** | ? | ? |This table presents the income statement for Marley's Manufacturing, separated by departments (Dept A and Dept B) for the month ending August 31, 2018. The statement details the sales, cost of goods sold, gross profit, and various expenses such as utility expenses, wages, and corporate costs allocation for both departments. The total expenses for each department are calculated, but the operating income/(loss) figures and percentages are not provided.

Operating profit: Operating profit can be defined as profit derived after adjustment of operating…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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LO 9.4Assume 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). After calculating the operating income in dollars and operating income in percentage, analyze the following financial information to determine costs that may need further investigation

**MARLEY'S MANUFACTURING**
**Income Statement**
*Month Ending August 31, 2018*

| | Dept A | Dept B |
|--------------------------|------------|------------|
| **Sales** | $22,000 | $51,000 |
| **Cost of goods sold** | 10,560 | 26,520 |
| **Gross profit** | $11,440 | $24,480 |
| | | |
| **Expenses** | | |
| Utility expenses | 1,000 | 3,200 |
| Wages expense | 5,500 | 10,200 |
| Costs allocated from corporate | 2,200 | 15,000 |
| **Total expenses** | $8,700 | $28,400 |
| | | |
| **Operating income/(loss) $** | ? | ? |
| **Operating income/(loss) %** | ? | ? |

This table presents the income statement for Marley's Manufacturing, separated by departments (Dept A and Dept B) for the month ending August 31, 2018. The statement details the sales, cost of goods sold, gross profit, and various expenses such as utility expenses, wages, and corporate costs allocation for both departments. The total expenses for each department are calculated, but the operating income/(loss) figures and percentages are not provided.

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