please answer EA8

EA8. LO 9.4 Using the information in Exercise EA5, Exercise EA6, and Exercise EA7, 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. Solution The current operating income for department B is: The new operating income would be: EAS. LO 9,4 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 percentuge, analyze the following financial information to determine costs that may need further investigation. (Hint: it muy be helpful to perform a vertical analysis.) Department B had an operating loss which was driven by a higher cost of goods sold (mainly transfers from department A). Department A also has a higher wage pereent of sales. Department B receives a higher percent of allocated cost!. These factors negatively impact the financial performance of department B. EA6. LO 9.4 As manager of department B in Marley's Manufacturing, based on the costs you identified in Exercise EAS for further research, how does this impact the financial performance of your department, and what might be some questions you want to ask or solutions you might propose to Marley's management? Solution Why are department As wages so high? Why is the corporate cost for 8 oo high? can we negotlate a lower price? EA7. LO 9.4 Based on your research of the market in Exercise EA5, you have determined the market price for the items your department purchase is 15% below what you are being charged by department A of Marley's Manufacturing. How would you view this as a manager? What steps could you take to solve this discrepancy? What alternatives would you consider, assuming you had control over purchasing decisions? Solution How would you view this as a manager? We would feel thot we were paying too much What steps could you take to solve this discrepancy? Thy to negotlate with deportment A. What alternatives would you consider, assuming you had control over purchasing decisions? Identify an external oupplier with a better price EA8. LO 9.4 Using the information in Exercise EA5, Exercise EA6, and Exercise EA7, 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. Solution The current operating income for department B is: The new operating income would be