Allied office Products
Autor: NBUMN • October 20, 2016 • Case Study • 1,264 Words (6 Pages) • 1,024 Views
- Using the information in the text and in Exhibit 2, calculate “ABC” based services costs for the TFC business.
6 ABC Cost Drivers
Storage 1,550,000/350,000 = $4.43 per carton
Requisition Handling 1,801,000/310,000 = $5.81 per requisition
Basic Warehouse Stack Selection 761,000/775,000 = $0.98 per line
“Pick Pack” Activity 734,000/697,000 = $1.05 per pick pack
Data Entry 612,000/775,000 = $0.79 per line
Desk Top Delivery 250,000/5,500 = $29.41 per delivery
- Using your new costing system, calculate distribution service costs for “Customer A” and “Customer B.”
# Required: Total Cost
A B A B
Storage 350 700 $1,551 $3,101
Requisition Handling 364 790 $2,115 $4,590
Warehouse 910 2500 $893 $2,453
Pick Pack 910 2500 $1,365 $2,625
Data Entry 910 2500 $719 $1,975
Desktop 0 26 $0 $765
Freight $2,250 $7,500
$8,893 $23,009
- What inference do you draw about the profitability of the two customers?
I would assume that Allied Office Profits is making a higher margin on Customer A. Customer A appears to follow a very standard ordering process, without additional requirements such as delivery. This allows Allied to rapidly complete B’s orders without incurring additional costs.
...