Answered: You are the warehouse manager for a…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 5EB: Assume you are the warehouse manager for Vinnies Vinyls, a multi-location business specializing in...

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You are the warehouse manager for a multi-location business specializing in old style vinyl records. The company operates under a cost-based transfer structure and the warehouse supplies all stores with the records.

The stores can purchase records only from the warehouse, and the warehouse can only sell to the stores.

The manager of the West store has concerns relating to the store’s financial performance and has asked for help analyzing transfer costs.

After calculating the operating income in dollars and the operating income percent, analyze the following financial information to determine costs that may need further investigation.

It may be helpful to perform a vertical analysis (i.e., perform a vertical analysis).

	warehouse	west store
sales	$18,920	$43,860
cost of goods sold	9,082	21,053
gross profit	$9,838	$22,807
selling expenses	860	2,752
Wges expenses	4,730	15,351
costs allocated from corporate	2,838	4,386
total expenses	$8,428	$22,489
operating income/(loss) $	?	?
operating income/(loss) %	?	?

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