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Gonzalo Inc. is a small distributor of mechanical pencils. Gonzalo identifies its three major activities and cost pools as ordering, receiving and storage, and shipping,
Gonzalo Inc. is a small distributor of mechanical pencils. Gonzalo identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2021: (Click the icon to view the activity and cost pool details.) (Click the icon to view additional information.). Will Gonzalo achieve its target operating income of $90,000 and its target operating income per unit of $0.36 per pencil pack in 2022? Show your calculations. Data table 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 500 $100 per order 2. Receiving and storage Loads moved 4,000 $60 per load 3. Shipping of pencil packs to retailers Number of shipments 1,500 $80 per shipment Print Done More info For 2021, Gonzalo buys 250,000 pencil packs at an average cost of $6 per pack and sells them to retailers at an average price of $8 per pack. Assume Gonzalo has no fixed costs and no inventories. For 2022, retailers are demanding a 5% discount off the 2021 price. Gonzalo's suppliers are only willing to give a 4% discount. Gonzalo expects to sell the same quantity of pencil packs in 2022 as it did in 2021. Using value engineering, Gonzalo decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Gonzalo expects to reduce the number of orders to 400 and the cost per order to $75. By redesigning the layout of the warehouse and reconfiguring the crates in which the pencil packs are moved, Gonzalo expects to reduce the number of loads moved to 3,500 and the cost per load moved to $50. First, determine the selling price to retailers in 2022. What is the selling price per pack to retailers in 2022? Since Gonzalo's suppliers are willing to grant a 4% discount, we must determine the cost to purchase the packs of pencils at the discounted price. What is the purchase price per pack in 2022? Calculate Gonzalo's operating income for 2022. Then, calculate the per unit amounts. (Round the per unit amounts to the nearest cent.) Revenues Costs: Total Per Unit Revenues Costs: Purchase cost of pencil packs Ordering costs Receiving and storage Shipping Total costs Operating income Total Per Unit Will Gonzalo achieve its target operating income of $90,000 and its target operating income per unit of 0.36 per pencil pack in 2022? Through value engineering that reduces the quantity of the activity and the cost-driver rate, Gonzalo its target operating income per unit of 0.36 per pencil pack despite pack of $ in its revenue per pencil pack of $ its target operating income of $90,000 and and the in its purchase cost per Submit quiz
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