Marley's Manufacturing Income Statement Month 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 $4 $ Operating income/(loss) in percentage % %
Marley's Manufacturing Income Statement Month 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 $4 $ Operating income/(loss) in percentage % %
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 Manufacturing Income Statement Month 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 an operating loss.
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