E13-19 (similar to) Question Help * Mastic Tiles is a small distributor of marble tiles. Mastic 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, Mastic buys 210,000 marble tiles at an average cost of $4 per tile and sells them to retailers at an average price of $6 per tile. Assume Mastic has no fixed costs and no inventories Read the requirements Data Table Requirement 1. Calculate Mastic's operating income for 2016 Revenues Costs 1,260,000 Cost per Unit of Cost Driver $60 per order $50 per load $30 per shipment Quantity of Activity 1. Placing and paying for orders of marble tiles 2. Receiving and storage 3. Shipping of marble tiles to retailers Cost Driver Cost Driver $ Purchase cost of tiles Ordering costs Receiving and storage Shipping 840,000 54,000 220,000 63.000 Number of orders Loads moved Number of shipments 900 4,400 2,100 1,177,000 Total costs PrintDone 83,000 Operating income Requirement 2. For 2017, retailers are demanding a 6% discount off the 2016 price. Mastic's suppliers are only willing to give a 5% discount Mastic 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 Mastic's operating income for 2017 Revenues S 1,184,400 osts 798,000 54,000 220,000 63,000 Purchase cost of tiles $ g costs Receiving and storage Shipping 1,135,000 Total costs S 49,400 Operating income Requirement 3. Suppose further that Mastic decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Mastic expects to reduce the number of orders to 600 and the cost per order to $30 per order. By redesigning the layout of the warehouse and reconfiguring the crates in which the marble tiles are moved, Mastic expects to reduce the number of loads moved to 3,525 and the cost per load moved to $48. Will Mastic achieve its target operating income of $0.54 per tile in 2017? Show your calculations Begin by calculating Mastic's operating income, then the per unit amounts if the company makes these changes. (Round the per unit amounts to the nearest cent.) Total Per Unit Revenues $1,184,400 Costs Purchase cost of tiles 798,000 Ordering costs Receiving and storage Shipping 18,000 169,200 63,000 1,048,200 Total costs $ 136,200 Operating income Enter any number in the edit fields and then click Check
