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 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 1.320 3.570 Wages expense 5.280 10,710 Costs allocated from corporate 1,980 14,790 Total expenses $8,580 $29,070 Operating income/(loss) in dollars $3,080 $4,590 Operating income/(loss) in percentage 14% 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 Asold 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 5 New operating income/(loss) for department B in percentage Fuel/utility expense Wages expense Costs allocated from corporate Total expenses Operating income/(loss) in dollars Operating income/(loss) in percentage $14,000 43,100 17,237 $74,337 $3,200 57,300 15,000 $75,500 Great Springs Bottled Water Company Income Statement (Market-based) Month Ending August 31, 20xx Transportation Bottling Sales $285,000 88,182 Cost of goods sold Gross profit Expenses: Fuel/utility expense Wages expense Costs allocated from corporate $14,000 43,100 17,237 $74,337 $3,200 57,300 15,000 $75,500 Total expenses Operating income/(loss) in dollars Operating income/loss) in percentage Operating income/(loss) in dollars Operating income/(loss) in percentage Great Springs Bottled Water Company Income Statement (Negotiated) Month Ending August 31, 20xx Iransportation Bottling Sales $285,000 Cost of goods sold 88,182 Gross profit Expenses: Fuel/utility expense Wages expense Costs allocated from corporate $14,000 43,100 $3,200 57,300 15,000 $75,500 17.237 Total expenses $74,337 Operating income/loss) in dollars Operating income/loss) in percentage Which of the following statements best describes your results? a. The operating income of the transportation division will be higher than the operating income of the bottling division under all three transfer pricing systems b. The operating income of the transportation division will be higher than the operating income of the bottling division under the cost-based and market-based transfer pricing systems only. 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 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 1.320 3.570 Wages expense 5.280 10,710 Costs allocated from corporate 1,980 14,790 Total expenses $8,580 $29,070 Operating income/(loss) in dollars $3,080 $4,590 Operating income/(loss) in percentage 14% 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 Asold 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 5 New operating income/(loss) for department B in percentage Fuel/utility expense Wages expense Costs allocated from corporate Total expenses Operating income/(loss) in dollars Operating income/(loss) in percentage $14,000 43,100 17,237 $74,337 $3,200 57,300 15,000 $75,500 Great Springs Bottled Water Company Income Statement (Market-based) Month Ending August 31, 20xx Transportation Bottling Sales $285,000 88,182 Cost of goods sold Gross profit Expenses: Fuel/utility expense Wages expense Costs allocated from corporate $14,000 43,100 17,237 $74,337 $3,200 57,300 15,000 $75,500 Total expenses Operating income/(loss) in dollars Operating income/loss) in percentage Operating income/(loss) in dollars Operating income/(loss) in percentage Great Springs Bottled Water Company Income Statement (Negotiated) Month Ending August 31, 20xx Iransportation Bottling Sales $285,000 Cost of goods sold 88,182 Gross profit Expenses: Fuel/utility expense Wages expense Costs allocated from corporate $14,000 43,100 $3,200 57,300 15,000 $75,500 17.237 Total expenses $74,337 Operating income/loss) in dollars Operating income/loss) in percentage Which of the following statements best describes your results? a. The operating income of the transportation division will be higher than the operating income of the bottling division under all three transfer pricing systems b. The operating income of the transportation division will be higher than the operating income of the bottling division under the cost-based and market-based transfer pricing systems only