Part $1$ of $9$

HW Score: $1\mathrm{.}18\%,1\mathrm{.}18$ of $100$ points

Carasco Associates prepares architectural drawings to conform to local structural$-$safety codes.

$($Click the icon to view the income statement.$)($Click the icon to view the percentage of time spent on activities.$)$

Assume administrative and support costs vary with professional$-$labor costs. Consider each requirement independently.

Read the requirements.

Requirement $1.$ How much of the total costs in $2017$ are value$-$added, non$-$value$-$added, or in the gray area between? Explain your answers briefly. What actions can Carasco take to reduce its costs?

Begin by calculating the total labor costs, then calculate the total costs. $($If a box is not used in the table, leave the box empty; do not enter a zero. Round your answers to the nearest whole dollar.$)$

Making calculations and preparing drawings for clients

Checking calculations and drawings

Correcting errors found in drawings $($not billed to clients$)$

Making changes in response to client requests $($billed to clients$)$ Correcting own errors regarding building codes $($not billed to clients$)$

Total

$\backslash$table$[[74\%$

$0$ Assiginment

Part $1$ of $5$

Points: $0$ of $10$

Mastic Tiles is a small distributor of marble tiles. Mastic 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 details.$)$

For $2016,$ Mastic buys $280,000$ marble tiles at an average cost of $$2$ per tile and sells them to retailers at an average price of $$6$ per tile. Assume Mastic has no fixed costs and no inventories.

Read the requirements.

Requirement $1.$ Calculate Mastic's operating income for $2016.$

Revenues

Costs: $$

Purchase cost of tiles

Ordering costs

Receiving and storage

Shipping

Total costs

Operating income

Requirements

Calculate Mastic's operating income for $2016.$

For $2017,$ retailers are demanding a $5\%$ discount off the $2016$ price. Mastic's suppliers are only willing to give a $3\%$ discount. Mastic 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 Mastic's operating income for $2017.$

Suppose further that Mastic decides to make changes in its ordering and receiving$-$and$-$storing practices. By placing long$-$run orders with its key suppliers, Mastic expects to reduce the number of orders to $600$ and the cost per order to $$30$ per order. By redesigning the layout of the warehouse and reconfiguring the crates in which the marble tiles are moved, Mastic expects to reduce the number of loads moved to $3,325$ and the cost per load moved to $$38.$ Will Mastic achieve its target operating income of $$2\mathrm{.}70$ per tile in $2017?$ Show your calculations.

Data table

$\backslash$table$[[$Activity$,$Cost Driver,$\backslash$table$[[$Quantity of$],[$Cost Driver$]],\backslash$table$[[$Cost per Unit of$],[$Cost Driver$]]],[1.$ Placing and paying for orders of marble tiles,Number of orders,$900,$$$60$ per order$],[2.$ Receiving and storage,Loads moved,$4,200,$$$40$ per load$],[3.$ Shipping of marble tiles to retailers,Number of shipments,$2,300,$$$30$ per shipment$]]$