Gaston Inc. is a small distributor of mechanical pencils. Gaston identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2016: 1 Data Table - X Activity Cost Driver 1. Placing and paying for orders of pencil packs Number of orders 2. Receiving and storage Loads moved 3. Shipping of pencil packs to retailers Number of shipments Quantity of Cost Driver 800 5,000 1,500 Cost per Unit of Cost Driver $100 per order $60 per load $70 per shipment Print Done Reference - X Total Per Unit 2,750,000 $ 11.00 $ Revenues Costs: Purchase cost of pencils Ordering costs Receiving and storage 4.00 1,000,000 80,000 300,000 105,000 0.32 1.20 0.42 Shipping 1,485,000 5.94 Total costs $ 1,265,000 $ 5.06 Operating income Print Done 1 More Info - X For 2016, Gaston buys 250,000 pencil packs at an average cost of $4 per pack and sells them to retailers at an average price of $11 per pack. Assume Gaston has no fixed costs and no inventories. For 2017, retailers are demanding a 6% discount off the 2016 price. Gaston's suppliers are only willing to give a 5% discount. Gaston expects to sell the same quantity of pencil packs in 2017 as it did in 2016. Print Done First, determine the selling price to retailers in 2017. The selling price per pack to retailers in 2017 is $ 10.34| Now determine the purchase price per packs of pencils in 2017. The purchase price per pack in 2017 is $ 3.8 Now that we have determined the new selling price and purchase price for 2017, determine the operating income for 2017. Then, calculate the per unit amounts for 2017. (Round the per unit amounts to the nearest cent.) Total Per Unit Revenues Costs: Purchase cost of pencil packs Ordering costs Receiving and storage Shipping Total costs Operating income How much must Gaston reduce its total cost and cost per unit if it is to earn the same target operating income in 2017 as it earned in 2016 (and thereby earn its required rate of return on investment). per unit if it is In referring to the 2016 operating income, Gaston will need to reduce its total costs by $ to achieve its target operating income in 2017