Super Bakery, Inc. & Costing Methods
Autor: Weeny31 • May 30, 2015 • Coursework • 753 Words (4 Pages) • 1,059 Views
Super Bakery, Inc. & Costing Methods
561/ACC-Accounting
July 7, 2014
Larry Key
Super Bakery, Inc. & Costing Methods
A sign of the future is the way corporations are forming to reduce costs and maximize profits. One way corporations are doing this is by forming virtual corporations. A virtual corporation is when the majority of the support activities are outsourced and only the core functions are done inside the main company. (Davis & Darling, 1996) Relationships are formed with outside companies whose business it is to perform the different functions that are required.
Super Bakery, Inc. is one such virtual corporation. Super Bakery, Inc. supplies baked goods to the institutional food market. (Davis & Darling, 1996) Supper Bakery, Inc. outsourced the selling, manufacturing, shipping, and warehousing of their products. The staff handles the financials or accounting, marketing, and research & development.
Strategies
After four years of disappointing sales, Super Bakery, Inc. came up with strategies to put their business back on top or at least to making a profit. They went after the school system food market because they determined that this would benefit from their low calorie, good tasting food. Next they decided to refrigerate, vacuum seal and distribute their product nationally which helped to solidify their national presence. (Davis & Darling, 1996) They began to support their customers by providing them with ways to obtain lower prices for certain commodities. Also they began providing pre-packaged meals to schools. Lastly the implementation of making Super Bakery, Inc. into a virtual corporation has helped them to reduce overhead expenses and capital investments.
Becoming ABC
Super Bakery, Inc. management needed to find a way to report on performance of both nonfinancial activities such as customer service and satisfaction levels and financial activities. Super Bakery, Inc. serves several different customers there by acquiring a large variation in the costs it takes to serve them. They had to decide if they wanted to spread the cost of producing and servicing the product equally among their entire customer base. This is in line with a standard costing system. Or to assign exactly what it would cost to produce the product to each individual customer, the activity base costing system (ABC).
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