FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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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