Gonzalo Inc. is a small distributor of mechanical pencils. Gonzalo identifies its three major activities and cost pools as ordering, receiving and storage, and shipping, and it reports the following details for 2016:

For 2016, Gonzalo buys 250,000 pencil packs at an average cost of \($6\) per pack and sells them to retailers at an average price of \($8\) per pack. Assume Gonzalo has no fixed costs and no inventories. For 2017, retailers are demanding a 5% discount off the 2016 price.
Gonzalo’s suppliers are only willing to give a 4% discount. Gonzalo expects to sell the same quantity of pencil packs in 2017 as it did in 2016.
Using value engineering, Gonzalo decides to make changes in its ordering and receiving-and-storing practices. By placing long-run orders with its key suppliers, Gonzalo expects to reduce the number of orders to 400 and the cost per order to \($75\).
By redesigning the layout of the warehouse and reconfiguring the crates in which the pencil packs are moved, Gonzalo expects to reduce the number of loads moved to 3,500 and the cost per load moved to \($50\).
Will Gonzalo achieve its target operating income of \($90,000\) and its target operating income per unit of \($0.36\) per pencil pack in 2017? Show your calculations.

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Activity 1. Placing and paying for orders of pencil packs 2. Receiving and storage 3. Shipping of pencil packs to retailers Cost Driver Number of orders Quantity of Cost Driver Cost per Unit of Cost Driver 500 $100 per order Loads moved 4,000 $ 60 per load Number of shipments 1,500 $ 80 per shipment