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Draper Inc. competes with Grippy Inc. in the distribution of mechanical pencils. Draper also identifies its three primary activities and cost pools as ordering, receiving
Draper Inc. competes with Grippy Inc. in the distribution of mechanical pencils. Draper also identifies its three primary activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2020: (Click the icon to view the activity and cost pool details.) For 2020, Draper buys 250,000 pencil packs at an average cost of $3.80 per pack. Draper plans to use cost-plus pricing. Read the requirements. Since Draper is using a cost-plus pricing strategy, we must first determine the total cost and the total cost per unit of the pencil packs. Calculate the total costs and then the costs per unit. Total Per Unit Costs: Purchase cost of pencil packs Ordering costs Receiving and storage Shipping $ 950.000 35,000 210,000 90,000 Total costs $1,285,000 - I Data Table Quantity of Cost Driver Cost per Unit of Cost Driver Cost Driver Number of orders 700 $50 per order Activity 1. Placing and paying for orders of pencil packs 2. Receiving and storage 3. Shipping of pencil packs to retailers Loads moved 4,200 $50 per load Number of shipments 1,500 $60 per shipment Requirements Calculate the prospective selling price (1) if Draper marks up the purchase costs of the pencil packs by 20% and (2) if Draper marks up the full cost of the pencil packs by 6%
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