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  • SCM - Session 4 Midwest Office Products

    Загружено:

    Abhishek Malhotra
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    This document outlines an activity based costing method for Midwest Office Products. It identifies key cost drivers like the number of cartons, inventory turnover, and customer requirements. It then assigns costs to specific activities like warehousing, order processing, and delivery based on the associated cost drivers and consumption of resources. For example, warehousing costs are allocated based on the number of cartons handled. It also provides an example of calculating total costs for two customers based on the indirect costs from various activities. Finally, it provides recommendations to optimize costs, like establishing minimum order values and restricting delivery destinations.

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    SACM

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    This document outlines an activity based costing method for Midwest Office Products. It identifies key cost drivers like the number of cartons, inventory turnover, and customer requirements. It then assigns costs to specific activities like warehousing, order processing, and delivery based on the associated cost drivers and consumption of resources. For example, warehousing costs are allocated based on the number of cartons handled. It also provides an example of calculating total costs for two customers based on the indirect costs from various activities. Finally, it provides recommendations to optimize costs, like establishing minimum order values and restricting delivery destinations.

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    © All Rights Reserved
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    Отметить как неприемлемый контент
    104 просмотров2 страницы

    SCM - Session 4 Midwest Office Products

    Загружено:

    Abhishek Malhotra
    This document outlines an activity based costing method for Midwest Office Products. It identifies key cost drivers like the number of cartons, inventory turnover, and customer requirements. It then assigns costs to specific activities like warehousing, order processing, and delivery based on the associated cost drivers and consumption of resources. For example, warehousing costs are allocated based on the number of cartons handled. It also provides an example of calculating total costs for two customers based on the indirect costs from various activities. Finally, it provides recommendations to optimize costs, like establishing minimum order values and restricting delivery destinations.

    Авторское право:

    © All Rights Reserved
    Скачайте в формате DOCX, PDF, TXT или читайте онлайн в Scribd
    Отметить как неприемлемый контент
    из 2

    Midwest Office Products Activity Based Costing Method

    Step A: Activity Cost Driver


    # of cartons (chosen) 80000
    Inventory Turnover (space management)
    Customer Requirement (Break opens cartons or re-packaging)
    Material Handling
    Space m^3
    Time hours

    Activity Activity Costs Cost Driver Quantity of Cost / ACD


    ACD
    Warehousing Warehouse # of cartons 80000 4320000/80000
    (2000000)+ = 54
    Personnel
    (2320000)
    Total: 4320000
    Process Order 840000 Time in 1500*16 = =8400000/24000
    hours 24000 = 35
    Manual Order
    Setup order 0.15 5.25 (35*0.15)
    Line Entry 0.075 2.625 (35* 0.075)
    EDI 0.10 3.5 (35*.01)
    Com Delivery 450000 # of cartons 6000 cartons =450000/6000
    =75

    Headers Customer 1 Customer 2


    Sales 610 634
    COGS 500 500
    Margins 110 134
    Indirect Costs
    Warehousing 54 54
    Customer Orders 3.5 (EDI order) 5.25 + 2.63 (Manual Order)
    Com Delivery 6 0 (No com delivery)
    Desktop Delivery 0 4*75 = 300 (4 hours of
    desktop delivery time)
    Interest on receivables 6.10 (1 month interest on 25.36 (4 month interest @1%
    sales 610 1% interest) on the sales amount of 634)
    Total Costs 40.40 -253.24

    Recommendations:
    Min order value for the desktop delivery model
    Restrictions on the doorstep delivery destinations
    To encourage EDI orders
    Transport and optimize the delivery routes to save costs
    Accounting for Products & By Products

    Sale 500/unit

    Process further Sale Price 625 /unit


    P1
    Cost 75/unit

    Joint Costs
    P2
    100000

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