Question
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
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 $21,000 $51,000 Cost of goods sold 10,290 26,520 Gross profit $10,710 $24,480 Utility expenses 1,050 3,570 Wages expense 5,250 10,200 Costs allocated from corporate 2,100 15,300 Total expenses $8,400 $29,070 Operating income/(loss) in dollars $2,310 -$4,590 Operating income/(loss) in percentage 11 % -9 % Assume the market price for the items your department purchase is 15% below what you are being charged by department A of Marleys 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 $fill in the blank 1 New operating income/(loss) for department B in percentage fill in the blank 2 %
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