BiskBisk Tiles is a small distributor of marble tiles. BiskBisk identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2019 Activity Cost Driver Quantity of Cost Driver Cost per Unit of Cost Driver 1. Placing and paying for orders of marble tiles Number of orders 900 $80 per order 2. Receiving and storage Loads moved 4,100 $50 per load 3. Shipping of marble tiles to retailers Number of shipments 2,500 $40 per shipment For 20192019, BiskBisk buys 230 comma 000230,000 marble tiles at an average cost of $ 2$2 per tile and sells them to retailers at an average price of $ 7$7 per tile. Assume BiskBisk has no fixed costs and no inventories. 1. Calculate BiskBisk's operating income for 20192019. 2. For 20202020, retailers are demanding a 55% discount off the 20192019 price. BiskBisk's suppliers are only willing to give a 44% discount. BiskBisk expects to sell the same quantity of marble tiles in 20202020 as in 20192019. If all other costs and cost-driver information remain the same, calculate BiskBisk's operating income for 20202020.
BiskBisk Tiles is a small distributor of marble tiles. BiskBisk identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2019 Activity Cost Driver Quantity of Cost Driver Cost per Unit of Cost Driver 1. Placing and paying for orders of marble tiles Number of orders 900 $80 per order 2. Receiving and storage Loads moved 4,100 $50 per load 3. Shipping of marble tiles to retailers Number of shipments 2,500 $40 per shipment For 20192019, BiskBisk buys 230 comma 000230,000 marble tiles at an average cost of $ 2$2 per tile and sells them to retailers at an average price of $ 7$7 per tile. Assume BiskBisk has no fixed costs and no inventories. 1. Calculate BiskBisk's operating income for 20192019. 2. For 20202020, retailers are demanding a 55% discount off the 20192019 price. BiskBisk's suppliers are only willing to give a 44% discount. BiskBisk expects to sell the same quantity of marble tiles in 20202020 as in 20192019. If all other costs and cost-driver information remain the same, calculate BiskBisk's operating income for 20202020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
BiskBisk
Tiles is a small distributor of marble tiles.
BiskBisk
identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for
2019
|
Activity
|
Cost Driver
|
Quantity of Cost Driver
|
Cost per Unit of Cost Driver
|
|
|---|---|---|---|---|
|
1.
|
Placing and paying for orders of marble tiles
|
Number of orders
|
900
|
$80 per order
|
|
2.
|
Receiving and storage
|
Loads moved
|
4,100
|
$50 per load
|
|
3.
|
Shipping of marble tiles to retailers
|
Number of shipments
|
2,500
|
$40 per shipment
|
For
20192019,
BiskBisk
buys
230 comma 000230,000
marble tiles at an average cost of
$ 2$2
per tile and sells them to retailers at an average price of
$ 7$7
per tile. Assume
BiskBisk
has no fixed costs and no inventories.|
1.
|
Calculate
BiskBisk's
operating income for
20192019.
|
|
2.
|
For
20202020,
retailers are demanding a
55%
discount off the
20192019
price.
BiskBisk's
suppliers are only willing to give a
44%
discount.
BiskBisk
expects to sell the same quantity of marble tiles in
20202020
as in
20192019.
If all other costs and cost-driver information remain the same, calculate
BiskBisk's
operating income for
20202020.
|
|
3.
|
Suppose further that
BiskBisk
decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers,
BiskBisk
expects to reduce the number of orders to
600600
and the cost per order to
$ 40$40
per order. By redesigning the layout of the warehouse and reconfiguring the crates in which the marble tiles are moved,
BiskBisk
expects to reduce the number of loads moved to
3 comma 2253,225
and the cost per load moved to
$ 48$48.
Will
BiskBisk
achieve its target operating income of
$ 3.33$3.33
per tile in
20202020?
Show your calculations. |
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