Score: 0 of 1 pt 6 of 6 (3 complete) HW Score: 50%, 3 of 6 pts E13-19 (similar t

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Score: 0 of 1 pt 6 of 6 (3 complete) HW Score: 50%, 3 of 6 pts E13-19 (similar to) Question Help * Listello Tiles is a small distributor of marble tiles. Listello identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 20186 (Click the icon to view the details.) For 2016, Listello buys 210,000 marble tiles at an average cost of $2 per tile and sells them to retailers at an average price of $7 per tile. Assume Listello has no fixed costs and no inventories. Read the requirements. Requirement 1. Calculate Listello's operating income for 2016 Requirements 1. Calculate Listello's operating income for 2016 2. For 2017, retailers are demanding a 4% discount off the 2016 price. Listelo's suppliers are only Costs: Purchase cost of tiles Ordering costs Receiving and storage Shipping willing to give a 3% discount Listelo 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 Listello's operating income for 2017 3. Suppose further that Listello decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Listello expects to reduce the number of orders to 100 and the cost per order to $35 per order. By redesigning the layout of the warehouse and reconfiguring the crates in which the marble tiles are moved, Listello expects to reduce the number of loads moved to 4,125 and the cost per load moved to $38. Will Listello achieve its target operating income of $3.44 per tile in 2017? Show your calculations. Total costs Operating income PrintDone Data Table Cost per Unit of Cost Driver $70 per order $40 per load $30 per shipment Quantity of Cost Driver 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 400 5,000 1,900 PrintDone

Explanation / Answer

1. Listello's Operting Income for 2016 :

2. Operating Income for 2017 after considering Prices discounts :

3. Operating income of 2017 after considering the changes including per unit profit :

After considering the changes, the profit per tile comes to $3.75 hence Listello will achieve it's target.

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