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). 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 $52,000 Cost of goods sold 10,780 27,040 Gross profit $11,220 $24,960 Expenses: Utility expenses $880 $3,640 Wages expense 5,280 10,920 Costs allocated from corporate 1,980 14,560 Total expenses $8,140 $29,120 Operating income/(loss) in dollars $ Operating income/(loss) in percentage % % Department B had an operating loss. Department A had an operating loss. Department B has a higher wage percent of sales. Department A receives a higher percent of allocated costs.

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). 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 $52,000 Cost of goods sold 10,780 27,040 Gross profit $11,220 $24,960 Expenses: Utility expenses $880 $3,640 Wages expense 5,280 10,920 Costs allocated from corporate 1,980 14,560 Total expenses $8,140 $29,120 Operating income/(loss) in dollars $ Operating income/(loss) in percentage % % Department B had an operating loss. Department A had an operating loss. Department B has a higher wage percent of sales. Department A receives a higher percent of allocated costs.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 5EA: Assume you are the department B manager for Marleys Manufacturing. Marleys operates under a...

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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). 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 ManufacturingIncome StatementMonth Ending August 31, 2018 Dept. A Dept. B Sales $21,000 $52,000 Cost of goods sold 9,870 27,040 Gross profit $11,130 $24,960 Expenses: Utility expenses $840 $3,120 Wages expense 5,040 10,920 Costs allocated from corporate 2,100 14,560 Total expenses $7,980 $28,600 Operating income/(loss) in dollars $fill in the blank 1 $fill in the blank 2 Operating income/(loss) in percentage fill in the blank 3 % fill in the blank 4 % Department B had…
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