Global Inc. is a small distributor of mechanical pencils. Global identifies its three major activities and...
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Global Inc. is a small distributor of mechanical pencils. Global 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 activity and cost pool details.) (Click the icon to view the 2016 operating income.) (Click the icon to view additional information) Read the requirement First, determine the selling price to retailers in 2017. The selling price per pack to retailers in 2017 is $ 6.58 Now determine the purchase price per packs of pencils in 2017. The purchase price per pack in 2017 is More info For 2016, Global buys 250,000 pencil packs at an average cost of $4 per pack and sells them to retailers at an average price of $7 per pack. Assume Global has no fixed costs and no inventories. For 2017, retailers are demanding a 6% discount off the 2016 price. Global's suppliers are only willing to give a 5% discount. Global expects to sell the same quantity of pencil packs in 2017 as it did in 2016 Print Done Reference Revenues Costs: Total Per Unit $ 1,750,000 $ 7.00 Purchase cost of pencils 1,000,000 $ Ordering costs 40,000 $ 4.00 0.16 Receiving and storage 270,000 $ 1.08 90,000 $ 0.36 Shipping 1,400,000 $ 5.60 Total costs $ 350,000 $ 1.40 Operating income Activity Cost Driver Quantity of Cost Driver Cost per Unit of Cost Driver 1. Placing and paying for orders of pencil packs Number of orders 2. Receiving and storage 3. Shipping of pencil packs to retailers Loads moved 400 4,500 $100 per order $60 per load Number of shipments 1,500 $00 per shipment Print Done - X Global Inc. is a small distributor of mechanical pencils. Global 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 activity and cost pool details.) (Click the icon to view the 2016 operating income.) (Click the icon to view additional information) Read the requirement First, determine the selling price to retailers in 2017. The selling price per pack to retailers in 2017 is $ 6.58 Now determine the purchase price per packs of pencils in 2017. The purchase price per pack in 2017 is More info For 2016, Global buys 250,000 pencil packs at an average cost of $4 per pack and sells them to retailers at an average price of $7 per pack. Assume Global has no fixed costs and no inventories. For 2017, retailers are demanding a 6% discount off the 2016 price. Global's suppliers are only willing to give a 5% discount. Global expects to sell the same quantity of pencil packs in 2017 as it did in 2016 Print Done Reference Revenues Costs: Total Per Unit $ 1,750,000 $ 7.00 Purchase cost of pencils 1,000,000 $ Ordering costs 40,000 $ 4.00 0.16 Receiving and storage 270,000 $ 1.08 90,000 $ 0.36 Shipping 1,400,000 $ 5.60 Total costs $ 350,000 $ 1.40 Operating income Activity Cost Driver Quantity of Cost Driver Cost per Unit of Cost Driver 1. Placing and paying for orders of pencil packs Number of orders 2. Receiving and storage 3. Shipping of pencil packs to retailers Loads moved 400 4,500 $100 per order $60 per load Number of shipments 1,500 $00 per shipment Print Done - X
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