Gala Inc. is a small distributor of mechanical pencils. Gala identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2019: First, determine the selling price to retailers in 2020. The selling price per pack to retailers in 2020 is Reference - X Requirement Total Per Unit Revenues $ 2,250,000 $ 9.00 If all other costs and cost-driver information remain the same, by how much must Gala reduce its total cost and cost per unit if it is to earn the same target operating income in 2020 as it earned in 2019 (and thereby earn its required rate of return on investment)? Costs: Purchase cost of pencils Ordering costs 5.00 0.20 1,250,000 $ 50,000 $ 300,000 $ 135,000 $ Receiving and storage 1.20 Shipping 0.54 - X Data table Total costs 6.94 1,735,000 $ 515,000 $ S 2.06 Operating income Quantity of Cost per Unit of Cost Cost Driver Driver Cost Driver Number of orders Activity 1. Placing and paying for orders of pencil packs 2. Receiving and storage 3. Shipping of pencil packs to retailers 500 $100 per order 5,000 $60 per load Print Done Loads moved Number of shipments 1,500 $90 per shipment Gala Inc. is a small distributor of mechanical pencils. Gala identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2019: First, determine the selling price to retailers in 2020. The selling price per pack to retailers in 2020 is Reference - X Requirement Total Per Unit Revenues $ 2,250,000 $ 9.00 If all other costs and cost-driver information remain the same, by how much must Gala reduce its total cost and cost per unit if it is to earn the same target operating income in 2020 as it earned in 2019 (and thereby earn its required rate of return on investment)? Costs: Purchase cost of pencils Ordering costs 5.00 0.20 1,250,000 $ 50,000 $ 300,000 $ 135,000 $ Receiving and storage 1.20 Shipping 0.54 - X Data table Total costs 6.94 1,735,000 $ 515,000 $ S 2.06 Operating income Quantity of Cost per Unit of Cost Cost Driver Driver Cost Driver Number of orders Activity 1. Placing and paying for orders of pencil packs 2. Receiving and storage 3. Shipping of pencil packs to retailers 500 $100 per order 5,000 $60 per load Print Done Loads moved Number of shipments 1,500 $90 per shipment