Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

please explain the formulas and how you get the answers Dutchman Tiles is a small distributor of marble tiles. Dutchman identifies its three major activities

image text in transcribedimage text in transcribedimage text in transcribed

please explain the formulas and how you get the answers

Dutchman Tiles is a small distributor of marble tiles. Dutchman identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2019 : (Click the icon to view the details.) For 2019 , Dutchman buys 290,000 marble tiles at an average cost of $4 per tile and sells them to retailers at an average price of $6 per tile. Assume Dutchman has no fixed costs and no inventories. Read the requirements. Requirement 1. Calculate Dutchman's operating income for 2019. Requirement 2. For 2020 , retailers are demanding a 6% discount off the 2019 price. Dutchman's suppliers are only willing to give a 3% discount. Dutchman expects to sell the same quantity of marble tiles in 2020 as in 2019 . If all other costs and cost-driver information remain the same, calculate Dutchman's operating income for 2020 . \begin{tabular}{|llrl|} \hline Activity & \multicolumn{1}{c}{ Cost Driver } & QuantityofCostDriver & CostperUnitofCostDriver \\ \hline 1. Placing and paying for orders of marble tiles & Number of orders & 800 & $60 per order \\ 2. Receiving and storage & Loads moved & 4,600 & $40 per load \\ 3. Shipping of marble tiles to retailers & Number of shipments & 2,200 & $30 per shipment \\ \hline \end{tabular} 1. Calculate Dutchman's operating income for 2019. 2. For 2020 , retailers are demanding a 6% discount off the 2019 price. Dutchman's suppliers are only willing to give a 3% discount. Dutchman expects to sell the same quantity of marble tiles in 2020 as in 2019 . If all other costs and cost-driver information remain the same, calculate Dutchman's operating income for 2020. 3. Suppose further that Dutchman decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Dutchman expects to reduce the number of orders to 500 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, Dutchman expects to reduce the number of loads moved to 3,725 and the cost per load moved to $38. Will Dutchman achieve its target operating income of $0.79 per tile in 2020 ? Show your calculations

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image
Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Handbook On Energy Audit And Environment Management

Authors: Y.P. Abbi, Shashank Jain

1st Edition

8179930920, 978-8179930922

More Books

Students also viewed these Accounting questions

Question

Why We Form Relationships Managing Relationship Dynamics?

Answered: 1 week ago