= Homework: ACC-360 Topic 6 Assignment Question 3, E13-1 Part 1 of 5 Requirements Bright Tiles is a small distributor of marble tiles. Bright identifies its three major activities and cost pools as ordering, receiving and storage (Click the icon to view the details.) For 2016, Bright buys 310,000 marble tiles at an average cost of $3 per tile and sells them to retailers at an average price of $7 per tile. As Read the requirements. Requirement 1. Calculate Bright's operating income for 2016. Revenues Costs: Purchase cost of tiles Ordering costs Receiving and storage Shipping Total costs Operating income Data table 1. 2. 3. Calculate Bright's operating income for 2016. For 2017, retailers are demanding a 4% discount off the 2016 price. Bright's suppliers are only willing to give a 3% discount. Bright expects to sell the same quantity of marble tiles in 2017 as in 2016. If all other costs and cost-driver information remain the same, calculate Bright's operating income for 2017. Suppose further that Bright decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Bright expects to reduce the number of orders to 300 and the cost per order to $45 per order. By redesigning the layout of the warehouse and reconfiguring the crates in which the marble tiles are moved, Bright expects to reduce the number of loads moved to 3,325 and the cost per load moved to $48. Will Bright achieve its target operating income of $2.22 per tile in 2017? Show your calculations. Activity 1. Placing and paying for orders of marble tiles 2. Receiving and storage 3. Shipping of marble tiles to retailers Cost Driver Quantity of Cost Driver Number of orders Loads moved 600 Cost per Unit of Cost Driver $90 per order 4,200 $50 per load Number of shipments 2,400 $70 per shipment Print Done Save FIL 3. Bright Tiles is a small distributor of marble tiles. Bright identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2016: 6(Click the icon to view the details.) For 2016, Bright buys 310,000 marble tiles at an average cost of $3 per tile and sells them to retailers at an average price of $7 per tile. Assume Bright has no fixed costs and no inventories. Read the requirements. Requirement 1. Calculate Bright's operating income for 2016. Revenues Costs: Purchase cost of tiles Ordering costs Receiving and storage Shipping Total costs Operating income Requirement 2. For 2017, retailers are demanding a 4% discount off the 2016 price. Bright's suppliers are only willing to give a 3% discount. Bright expects to sell the same quantity of marble tiles in 2017 as in 2016. If all other costs and cost-driver information remain the same, calculate Bright's operating income for 2017. Revenues Costs: Purchase cost of tiles Ordering costs Receiving and storage Shipping Total costs Operating income Requirement 3. Suppose further that Bright decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Bright expects to reduce the number of orders to 300 and the cost per order to $45 per order. By redesigning the layout of the warehouse and reconfiguring the crates in which the marble tiles are moved, Bright expects to reduce the number of loads moved to 3,325 and the cost per load moved to $48. Will Bright achieve its target operating income of $2.22 per tile in 2017? Show your calculations. Begin by calculating Bright's operating income, then the per unit amounts if the company makes these changes. (Round the per unit amounts to the nearest cent.) Revenues Costs: Purchase cost of tiles Ordering costs Receiving and storage Shipping Total costs Operating income Total Per Unit Bright (1) to achieve its target operating income of $2.22 per tile in 2017. 6: Data Table 7: Requirements 1. Calculate Bright's operating income for 2016. 2. Activity 1. Placing and paying for orders of marble tiles 2. Receiving and storage 3. Shipping of marble tiles to retailers Cost Driver Number of orders Loads moved Number of shipments Quantity of Cost Driver Cost per Unit of Cost Driver 600 $90 per order 4,200 $50 per load 2,400 $70 per shipment Print 3. For 2017, retailers are demanding a 4% discount off the 2016 price. Bright's suppliers are only willing to give a 3% discount. Bright expects to sell the same quantity of marble tiles in 2017 as in 2016. If all other costs and cost-driver information remain the same, calculate Bright's operating income for 2017. Suppose further that Bright decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Bright expects to reduce the number of orders to 300 and the cost per order to $45 per order. By redesigning the layout of the warehouse and reconfiguring the crates in which the marble tiles are moved, Bright expects to reduce the number of loads moved to 3,325 and the cost per load moved to $48. Will Bright achieve its target operating income of $2.22 per tile in 2017? Show your calculations. (1) will be able O will not be able Jason Brown is the managing partner of a business that has just finished building a 60-room motel. Brown anticipates that he will rent these rooms for 17,500 nights next year (or 17,500 room-nights). All rooms are similar and will rent for the same price. Brown estimates the following operating costs for next year: (Click the icon to view the operating costs.) (Click the icon to view additional information.) Read the requirements. Data table Variable operating costs $3 per room-night Requirement 1. What price should Brown charge for a room-night? What is the markup as a percentage of the full cost of a room-nigh Begin by selecting the formula, then enter the amounts and solve for the room price per night. Fixed costs Salaries and wages $ 180,000 Price per room-night Maintenance of building and pool 44,000 161,000 per room-night Other operating and administration costs 385,000 Total fixed costs More info The capital invested in the motel is $1,400,000. The partnership's target return on investment is 20%. Brown expects demand for rooms to be uniform throughout the year. He plans to price the rooms at full cost plus a markup on full cost to earn the target return on investment. Print Done Help me solve this Etext pages Get more help Requirements 1. What price should Brown charge for a room-night? What is the markup as a percentage of the full cost of a room-night? 2. Brown's market research indicates that if the price of a room-night determined in requirement 1 is reduced by 10%, the expected number of room-nights Brown could rent would increase by 10%. Should Brown reduce prices by 10%? Show your calculations. Print Done Check answer 4. Jason Brown is the managing partner of a business that has just finished building a 60-room motel. Brown anticipates that he will rent these rooms for 17,500 nights next year (or 17,500 room-nights). All rooms are similar and will rent for the same price. Brown estimates the following operating costs for next year: 8(Click the icon to view the operating costs.) 9(Click the icon to view additional information.) Read the requirements 10 Requirement 1. What price should Brown charge for a room-night? What is the markup as a percentage of the full cost of a room-night? Begin by selecting the formula, then enter the amounts and solve for the room price per night. (1) + (2) Price per room-night per room-night What is the markup as a percentage of the full cost of a room-night? (Enter the markup as a percentage, X%.) (3) Markup as a % of full cost (4) % markup Requirement 2. Brown's market research indicates that if the price of a room-night determined in Requirement 1 is reduced by 10%, the expected number of room-nights Brown could rent would increase by 10%. Should Brown reduce prices by 10%? Show your calculations. Begin by calculating the new contribution margin which will help you make your decision. Select the formula first, then enter the amounts to calculate the contribution margin. (Round the new price per room to two decimal places. Round the contribution margin to the nearest dollar.) (5) Should Brown reduce prices by 10%? (6) (7) ) x = New contribution margin Because the contribution margin at the reduced price is (8) the original contribution margin at the selling price you calculated in requirement 1, Brown (9) reduce the price of the rooms. 8: Data Table 9: More Info Variable operating costs Fixed costs Salaries and wages Maintenance of building and pool $3 per room-night 180,000 44,000 Other operating and administration costs Total fixed costs 161,000 $ 385,000 The capital invested in the motel is $1,400,000. The partnership's target return on investment is 20%. Brown expects demand for rooms to be uniform throughout the year. He plans to price the rooms at full cost plus a markup on full cost to earn the target return on investment. 10: Requirements 1. What price should Brown charge for a room-night? What is the markup as a percentage of the full cost of a room-night? 2. Brown's market research indicates that if the price of a room-night determined in requirement 1 is reduced by 10%, the expected number of room-nights Brown could rent would increase by 10%. Should Brown reduce prices by 10%? Show your calculations. (1) O O Variable cost per room-night (2) O O Variable cost per room-night (3) O O Variable cost per room Fixed cost per room-night O Fixed cost per room-night Target contribution margin per room-night Target operating income-night Target contribution margin per room-night Target operating income-night Full-cost per room Markup per room O Price charged per room (4) O O Variable cost per room (5) (6) O (7) O Full-cost per room Markup per room O Price charged per room Fixed cost per room New price per room O Variable cost per room Fixed cost per room New price per room O Variable cost per room New price per room O Markup percentage Original number of rooms rented (8) less than O greater than O New number of rooms rented (9) should not 10 should