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 ManufacturingIncome StatementMonth Ending August 31, 2018 Dept. ADept. BSales$21,000 $52,000 Cost of goods sold10,290 27,560 Gross profit$10,710 $24,440 Utility expenses1,050 3,640 Wages expense5,460 10,400 Costs allocated from corporate2,100 15,080 Total expenses$8,610 $29,120 Operating income/(loss) in dollars$2,100 -$4,680 Operating income/(loss) in percentage10%-9%Assume the market price for the items your department purchase is 15% below what you are being charged by department A of Marley’s Manufacturing.Determine the operating income for department B, assuming department A “sold” department B 1,000 units during the month and department A reduces the selling price to the market price. Round your percentage answer to one decimal place.New operating income/(loss) for department B in dollars$fill in the blank 1 New operating income/(loss) for department B in percentagefill in the blank 2%

Here we will keep Aug 2018 data same except reduction in material cost by 15% and…

Answered: Assume you are the department B manager…

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).

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		$52,000
Cost of goods sold	10,290		27,560
Gross profit	$10,710		$24,440
Utility expenses	1,050		3,640
Wages expense	5,460		10,400
Costs allocated from corporate	2,100		15,080
Total expenses	$8,610		$29,120
Operating income/(loss) in dollars	$2,100		-$4,680
Operating income/(loss) in percentage	10	%	-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	$fill in the blank 1
New operating income/(loss) for department B in percentage	fill in the blank 2	%

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