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.
Calculate Gonzalo’s operating income for 2016.

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