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Grizzly Inc. is a small distributor of mechanical pencils. Grizzly identifies its three major activities and cost pools as ordering, receiving and storage, and shipping,
Grizzly Inc. is a small distributor of mechanical pencils. Grizzly identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2016: E: (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.) Required First determine the selling price to retailers in 2017. Activity and cost pool details - The selling price per pack to retailers in 2017 is Quantity of Cost Driver Cost per Unit of Cost Driver Operating income 700 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 5,000 $100 per order $60 per load $60 per shipment Total Per Unit $ 2,250,000 $ 9.00 1,500 Revenues Costs: 3.00 Addtional information Purchase cost of pencils Ordering costs Receiving and storage 0.28 Print Done 750,000 70,000 300,000 90,000 1.20 0.36 Shipping For 2016, Grizzly buys 250,000 pencil packs at an average cost of $3 per pack and sells them to retailers at an average price of $9 per pack. Assume Grizzly has no fixed costs and no inventories. For 2017, retailers are demanding a 7% discount off the 2016 price. Grizzly's suppliers are only willing to give a 5% discount. Grizzly expects to sell the same quantity of pencil packs in 2017 as it did in 2016. 4.84 1,210,000 Total costs $ 1,040,000 $ 4.16 Operating income Print Done Print Done
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