T113-2 (similar to) Question Help Gala Inc. is a small distributor of mechanical pencils. Gala 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 activity and cost pool details ) (Click the icon to view the 2016 operating income.) 1 (Click the icon to view additional information) Read the requirement First, determine the selling price to retailers in 2017 The selling price per pack to retailers in 2017 is S 837 Now determine the purchase price per packs of pencils in 2017 The purchase price per pack in 2017 is $ Data Table More Info Quantity of Cost Driver Cost per Unit of Cost Driver Activity 1. Placing and paying for orders of pencil packs 2. Receiving and storage 3. Shipping of pencil packs to retailers For 2016, Gala buys 250,000 pencil packs at an average cost of S4 per pack and sells them to retailers at an average price of $9 per pack. Assume Gala has no fixed costs and no inventories. For 2017, retailers are demanding a 7% discount off the 2016 price. Gala's suppliers are only willing to give a 5% discount. Gala expects to sell the same quantity of pencil packs in 2017 as it did in 2016. Cost Driver Number of orders Loads moved Number of shipments 600 5,000 1,500 $100 per order $60 per load S90 per shipment Print Done Print Done 1 Reference Total Per Unit 2,250,000 S 9.00 Revenues Costs: Purchase cost of pencils1 Ordering costs Receiving and storage Shipping 1,000,000 60,000 300,000 135,000 1,495,000 4.00 0.24 1.20 0.54 5.98 3.02 Total costs $ 755,000 S Operating income