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Eagle Tiles is a small distributor of marble til and storage, and shipping, and it reports the (Click the icon to view the details.)

Eagle Tiles is a small distributor of marble til and storage, and shipping, and it reports the (Click the icon to view the details.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please answer the requirements 1, 2 and 3 and refer to the data table.
Eagle Tiles is a small distributor of marble tiles. Eagle 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, Eagle buys 220,000 marble tiles at an average cost of $4 per tile and sells them to retailers at an average price of $6 per tile. Assume Eagle has no fixed costs and no inventories. Requirement 1. Calculate Eagle's operating income for 2019. Revenues Costs: Purchase cost of tiles Ordering costs Receiving and storage Shipping Total costs Operating income Data table Activity Placing and paying for orders of marble 1. tiles 2. Receiving and storage 3. Shipping of marble tiles to retailers Requirements Cost Driver Quantity of Cost Driver Cost per Unit of Cost Driver Number of orders 900 $80 per order Loads moved 4,300 $50 per load Number of shipments 1,700 $40 per shipment 1. 2. Calculate Eagle's operating income for 2019. For 2020, retailers are demanding a 4% discount off the 2019 price. Eagle's suppliers are only willing to give a 3% discount. Eagle 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 Eagle's operating income for 2020. 3. Suppose further that Eagle decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Eagle expects to reduce the number of orders to 600 and the cost per order to $40 per order. By redesigning the layout of the warehouse and reconfiguring the crates in which the marble tiles are moved, Eagle expects to reduce the number of loads moved to 3,425 and the cost per load moved to $48. Will Eagle achieve its target operating income of $0.41 per tile in 2020? Show your calculations. × wer
Transcribed Image Text:Eagle Tiles is a small distributor of marble tiles. Eagle 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, Eagle buys 220,000 marble tiles at an average cost of $4 per tile and sells them to retailers at an average price of $6 per tile. Assume Eagle has no fixed costs and no inventories. Requirement 1. Calculate Eagle's operating income for 2019. Revenues Costs: Purchase cost of tiles Ordering costs Receiving and storage Shipping Total costs Operating income Data table Activity Placing and paying for orders of marble 1. tiles 2. Receiving and storage 3. Shipping of marble tiles to retailers Requirements Cost Driver Quantity of Cost Driver Cost per Unit of Cost Driver Number of orders 900 $80 per order Loads moved 4,300 $50 per load Number of shipments 1,700 $40 per shipment 1. 2. Calculate Eagle's operating income for 2019. For 2020, retailers are demanding a 4% discount off the 2019 price. Eagle's suppliers are only willing to give a 3% discount. Eagle 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 Eagle's operating income for 2020. 3. Suppose further that Eagle decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Eagle expects to reduce the number of orders to 600 and the cost per order to $40 per order. By redesigning the layout of the warehouse and reconfiguring the crates in which the marble tiles are moved, Eagle expects to reduce the number of loads moved to 3,425 and the cost per load moved to $48. Will Eagle achieve its target operating income of $0.41 per tile in 2020? Show your calculations. × wer
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