=+7-18 KK Target prices, target costs, activity-based costing OBJECTIVES 1, 2 Adonis Pty Ltd is a small distributor of marble tiles. Adonis identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2014:

Activity Cost driver Quantity of cost driver Cost per unit of cost driver 1 Placing and paying for orders of marble tiles Number of orders 500 $50 per order 2 Receiving and storage Loads moved 4000 $30 per load 3 Shipping of marble tiles to retailers Number of shipments 1500 $40 per shipment 288 Chapter 7: Cost management, capacity costing and capacity management M07_HORN3377_02_LT_C07.indd 288 2/09/13 3:41 PM For 2014, Adonis buys 250000 marble tiles at an average cost of $3 per tile and sells them to retailers at an average price of

$4 per tile. Assume Adonis has no fixed costs and no inventories.

Required 1 Calculate Adonis’s operating profit for 2014.