Crazing Tiles is a small distributor of marble tiles. Crazing identifies its three major activities and cost pools as ordering, receiving and storage and shipping, and it reports the following details for 2016 EEB (Click the icon to view the details) For 2016, Crazing buys 300,000 marble tiles at an average cost of $3 per tile and sells them to retailers at an average price of $7 per tile. Ass Crazing has no fixed costs and no inventories Read the requirements. Requirement 1. Calculate Crazing's operating income for 2016 Costs Purchase cost of tiles Ordering costs Receiving and storage Shipping Total costs Operating income Data Table Quantity ot Cost per Unit Activity 1. Placing and paying for orders of marble tiles Number of orders 2. Receiving and storage 3. Shipping of marble tiles to retailers Cost Driver Cost Driver of Cost Driver 00 $80 per order ,900 $40 per load 2.300 $50 per shipment Loads moved Number of shipments 1. Calculate Crazing's operating income for 2016 2. For 2017, retailers are demanding a 5% discount off the 2016 price. Crazing's suppliers are only willing to give a 3% discount. Crazing 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 Crazing's operating income for 2017 3. Suppose further that Crazing decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Crazing expects to reduce the number of orders to 600 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, Crazing expects to reduce the number of loads moved to 4,025 and the cost per load moved to $38. Will Crazing achieve its target operating income of $2.97 per tile in 2017? Show your calculations Crazing Tiles is a small distributor of marble tiles. Crazing identifies its three major activities and cost pools as ordering, receiving and storage and shipping, and it reports the following details for 2016 EEB (Click the icon to view the details) For 2016, Crazing buys 300,000 marble tiles at an average cost of $3 per tile and sells them to retailers at an average price of $7 per tile. Ass Crazing has no fixed costs and no inventories Read the requirements. Requirement 1. Calculate Crazing's operating income for 2016 Costs Purchase cost of tiles Ordering costs Receiving and storage Shipping Total costs Operating income Data Table Quantity ot Cost per Unit Activity 1. Placing and paying for orders of marble tiles Number of orders 2. Receiving and storage 3. Shipping of marble tiles to retailers Cost Driver Cost Driver of Cost Driver 00 $80 per order ,900 $40 per load 2.300 $50 per shipment Loads moved Number of shipments 1. Calculate Crazing's operating income for 2016 2. For 2017, retailers are demanding a 5% discount off the 2016 price. Crazing's suppliers are only willing to give a 3% discount. Crazing 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 Crazing's operating income for 2017 3. Suppose further that Crazing decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Crazing expects to reduce the number of orders to 600 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, Crazing expects to reduce the number of loads moved to 4,025 and the cost per load moved to $38. Will Crazing achieve its target operating income of $2.97 per tile in 2017? Show your calculations
