Deco Tiles is a small distributor of marble tiles. Deco identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2013

For 2013, Deco buys 290,000 marble tiles at an average cost of $4 per tile and sells them to retailers at an average price of $7 per tile. Assume Deco has no fixed costs and no inventories.

Quantity ofCost per UnitActivityCost DriverCost Driverof Cost Driver1.Placing and paying for orders of marble tilesNumber of orders900$90 per order2.Receiving and storageLoads moved4,900$40 per load3.Shipping of marble tiles to retailersNumber of shipments1,900$50 per shipment

1.Calculate Deco's operating income for 2013.2.

For 2014, retailers are demanding a 4% discount off the

2013 price. Deco's suppliers are only willing to give a 3% discount. Deco expects to sell the same quantity of marble tiles in 2014 as in 2013. If all other costs and cost-driver information remain the same, calculate Deco's operating income for 2014.

3.Suppose further that Deco decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Deco expects to reduce the number of orders to 600 and the cost per order to $45 per order. By redesigning the layout of the warehouse and reconfiguring the crates in which the marble tiles are moved, Deco expects to reduce the number of loads moved to 4,025 and the cost per load moved to $38. Will Deco achieve its target operating income of $2.09 per tile in 2014? Show your calculations