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Bisk Tiles is a small distributor of marble tiles. Bisk identifies its three major activities and cost pools as ordering, receiving and storage, and shipping,
Bisk Tiles is a small distributor of marble tiles. Bisk identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2016: Click the icon to view the details.) For 2016, Bisk buys 270,000 marble tiles at an average cost of $3 per tile and sells them to retailers at an average price of $5 per tile. Assume Bisk has no fixed costs and no inventories. Read the requirements, Requirement 1. Calculate Bisk's operating income for 2016. Revenues Costs: Purchase cost of tiles Ordering costs Receiving and storage Shipping Total costs Operating income Data Table ntifies its e cost of Cost Driver Quantity of Cost Driver Cost per Unit of Cost Driver Activity 1. Placing and paying for orders of marble tiles 2. Receiving and storage 3. Shipping of marble tiles to retailers Number of orders Loads moved Number of shipments 2016. 800 $80 per order 4,400 $50 per load 1,800 $40 per shipment Requirements 2. Calculate Bisk's operating income for 2016. For 2017, retailers are demanding a 4% discount off the 2016 price. Bisk's suppliers are only willing to give a 3% discount. Bisk expects to sell the same quantity of marble tiles in 2017 as in 2016. If all other costs and cost-driver information remain the same, calculate Bisk's operating income for 2017. Suppose further that Bisk decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Bisk expects to reduce the number of orders to 500 and the cost per order to $40 per order. By redesigning the layout of the warehouse and reconfiguring the crates in which the marble tiles are moved, Bisk expects to reduce the number of loads moved to 3,525 and the cost per load moved to $48. Will Bisk achieve its target operating income of $1.12 per tile in 2017? Show your calculations. Print Done
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