Using the information in the previous exercises about 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.

Data from previous exercise

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

		Month Ending August 31, 2018
					Dept A		Dept B
Sales				$22,000		$51,000
Cost of goods sold				10,560		26,520
Gross profit				$11,440		$24,480
Utility expenses				1,000		3,200
Wages expense				5,500		10,200
Costs allocated from corporate				2,200		15,000
Total expenses				$8,700		$28,400
Operating income/(loss) $				$2,740		-$3,920.00
Operating income/(loss) %				12.45%		-7.68%