Gaston Inc. is a small distributor of mechanical pencils. Gaston 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 activity and cost pool details.) (Click the icon to view additional information.) Will Gastonachieve its target operating income of $320,000and its target operating income per unit of $1.28 per pencil pack in 2020Show your calculations. First, determine the selling price to retailers in 2020. The selling price per pack to retailers in 2020 is Data table Activity 1. Placing and paying for orders of pencil packs Cost Driver Number of orders Quantity of Cost per Unit of Cost Cost Driver Driver 2. Receiving and storage Loads moved 700 $100 per order 4,000 $60 per load 3. Shipping of pencil packs to retailers Number of shipments 1,500 $80 per shipment More info For 2019, Gaston buys 250,000 pencil packs at an average cost of $5 per pack and sells them to retailers at an average price of $8 per pack. Assume Gaston has no fixed costs and no inventories. For 2020, retailers are demanding a 5% discount off the 2019 price. Gaston's suppliers are only willing to give a 4% discount. Gaston expects to sell the same quantity of pencil packs in 2020 as it did in 2019. Using value engineering, Gaston decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Gaston expects to reduce the number of orders to 500 and the cost per order to $50. By redesigning the layout of the warehouse and reconfiguring the crates in which the pencil packs are moved, Gaston expects to reduce the number of loads moved to 3,500 and the cost per load moved to $50.
Gaston Inc. is a small distributor of mechanical pencils. Gaston 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 activity and cost pool details.) (Click the icon to view additional information.) Will Gastonachieve its target operating income of $320,000and its target operating income per unit of $1.28 per pencil pack in 2020Show your calculations. First, determine the selling price to retailers in 2020. The selling price per pack to retailers in 2020 is Data table Activity 1. Placing and paying for orders of pencil packs Cost Driver Number of orders Quantity of Cost per Unit of Cost Cost Driver Driver 2. Receiving and storage Loads moved 700 $100 per order 4,000 $60 per load 3. Shipping of pencil packs to retailers Number of shipments 1,500 $80 per shipment More info For 2019, Gaston buys 250,000 pencil packs at an average cost of $5 per pack and sells them to retailers at an average price of $8 per pack. Assume Gaston has no fixed costs and no inventories. For 2020, retailers are demanding a 5% discount off the 2019 price. Gaston's suppliers are only willing to give a 4% discount. Gaston expects to sell the same quantity of pencil packs in 2020 as it did in 2019. Using value engineering, Gaston decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Gaston expects to reduce the number of orders to 500 and the cost per order to $50. By redesigning the layout of the warehouse and reconfiguring the crates in which the pencil packs are moved, Gaston expects to reduce the number of loads moved to 3,500 and the cost per load moved to $50.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Help determine the selling price to retailers in 2020. And answer the more info section after finding the selling price please.
Transcribed Image Text:Gaston Inc. is a small distributor of mechanical pencils. Gaston 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 activity and cost pool details.)
(Click the icon to view additional information.)
Will Gastonachieve its target operating income of $320,000and its target operating income per unit of $1.28 per pencil pack in
2020Show your calculations.
First, determine the selling price to retailers in 2020.
The selling price per pack to retailers in 2020 is
Data table
Activity
1. Placing and paying for orders of
pencil packs
Cost Driver
Number of orders
Quantity of Cost per Unit of Cost
Cost Driver
Driver
2. Receiving and storage
Loads moved
700 $100 per order
4,000 $60 per load
3. Shipping of pencil packs to
retailers
Number of shipments
1,500 $80 per shipment
More info
For 2019, Gaston buys 250,000 pencil packs at an average cost of $5 per pack
and sells them to retailers at an average price of $8 per pack. Assume Gaston has
no fixed costs and no inventories. For 2020, retailers are demanding a 5% discount
off the 2019 price. Gaston's suppliers are only willing to give a 4% discount.
Gaston expects to sell the same quantity of pencil packs in 2020 as it did in 2019.
Using value engineering, Gaston decides to make changes in its ordering
and receiving-and-storing practices. By placing long-run orders with its
key suppliers, Gaston expects to reduce the number of orders to 500 and the cost
per order to $50. By redesigning the layout of the warehouse and reconfiguring the
crates in which the pencil packs are moved, Gaston expects to reduce the number
of loads moved to 3,500 and the cost per load moved to $50.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 1 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education