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).
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).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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