Caldwell Supply, a wholesaler, has determined that its operations have three primary activities: purchasing, warehousing, ond distributing The firm reports the following operating data for the year just completed Activity Quantity of Cost per unit of Cost Cost Driver Cost Driver Driver Purchasing Number of purchase orders 1

Caldwell Supply, a wholesaler, has determined that its operations have three primary activities: purchasing, warehousing, ond distributing The firm reports the following operating data for the year just completed Activity Quantity of Cost per unit of Cost Cost Driver Cost Driver Driver Purchasing Number of purchase orders 1.06 $156 per order Warehousing Number of moves 8,600 36 per move Distributing Number of shipments 560 86 per shipment Caldwell buys 100,600 units at an average unit cost of $16 and sells them at an average unit price of $26. The firm also has toed operating costs of $250,600 for the year. Caldwell's customers are demanding a 16% discount for the coming year. The company expects to set the same amount it the demand for price reduction can be met. Caldwell's suppliers, however, are willing to give only a 10% discount Required: Caldwell has estimated that it can reduce the number of purchase orders to 740 and can decrease the cost of each shipment by $9 with minor changes in its operations. Any further cost savings must come from reengineering the warehousing processes. What is the maximum cost (le, target cost) for warehousing if the firm desires to earn the same amount of profit next year? Maximum cost