Dakota Office Products

One assumption that should be clearly analyzed is that the collection period is of 30 days net. Not always customers have the ability and willingness to pay off their debts in 30 days, some may take more time, and some could incur in bad debt.

4. Distributing services using activity based costing reveals that Customer A is a highly more profitable consumer to Western than Customer B, despite identical net sales (see attached). Customer A uses less storage, delivery services, has fewer requisitions and a smaller inventory balance, making them a more inexpensive customer to service, in comparison to Customer B.

While we are performing our analysis on different aspects of the company, we look at the three main types of cost. When we remain devoted to improving our costs, and the faults related, we show our same devotion to our consumers. This is portrayed by the quality of products we put on the shelves. Prevention costs, appraisal costs and Failure costs are areas

Henderson Printing is a small-to medium sized firm that manufactures account books, ledgers, and various types of record books that are used in business (Long, 2010, p. 512). This company’s compensation system will be analyzed based on the five contextual variables as discussed in the textbook. The environment in which Henderson Printing operates can be classified as stable, as well as simple. This can be justified, as the company produces stable annual sales, thus it can be concluded that product lifestyles are not short, and product and service demand is constant (Long, 2010, p. 40). Additionally, the product/service provided is fairly simple, and the technology is not complex (Long, 2010, p. 512). The

In our second assumption, instead of using the cost of goods per cases in 1986, we try to use the percentage it counts in the total expenses which is 50.4% and to find the sales needed to break-even. The detail of the calculation is shown in the answer for questions d. The result is that 95,635, a little bit higher than the estimated sales of 90,000.

One of the most important parts of a business is the financial management. Each and every other company always strives to have the best management when it comes to its finances. Most organizations have come up with plans and marketing strategies. This is due to the fact tat when companies finances are poorly managed then definitely the whole company is likely to be in trouble or even come down. The financial techniques and principles in most cases comprise of quite a number of aspect for instance those that we intend to look at in this paper-the financial reporting. This will basically comprise of the quality of data and information that the company produced to some of the various stakeholders. Other than that, the paper will also analyze the financial position and performance of the organization using accounting ratios. Another important aspect of financial principles is costing. This basically entails the cost of producing goods and services in the company and how it generally affects the overall performance of the company. The paper will also delve into how important costs in the pricing strategy of the business are. It will further come up with a costing and pricing system that can help the company improve. Last but not least, we focus on the company's budgets and budgetary control. Here there are very important areas that have to be looked into, for

3. Briefly describe how the current production cost assignment system works. What are the consumption ratios (activity percentages) for assigning manufacturing overhead to each product at present?

Develop an activity-base cost system for Dakota Office Products based on Year 200 data. Calculate the activity cost-driver rate for each DOP activity in 2000.

As previously mentioned, the use of activity-based costing gives Kemps an advantage when competing for customers in an ever more competitive and growing market. However, the ability to succinctly distinguish how many small changes, when taken together, can have a large impact on cost savings (and therefore profit), is necessary in order to convince customers who may not be familiar with the many benefits of ABC. Mainly, management would want to demonstrate how the cost savings that they enjoy are ultimately passed on to their customers, perhaps by showing some of the improvements that have been made to their own company as a result of implementation, specifically focusing on advancements that would have a direct impact on the customer’s business.

In May 2006, Westmount Retirement Residence was having very low profitability. Its very simple pricing model essentially charged each resident the same price per month regardless of their needs. This was due to a change in the patients´ demands. In the past, patients´ demands were similar and therefore the company´s pricing and costing system was appropriate. But changes in the population and in the requirements of the residents caused that the pricing model remained out of date and the costing system inappropriate. One of the problems observed when analyzing the company´s situation was that due to the costing system used it was not possible to have a clear picture of how much each of the services offered were costing. Consequently, it was clearly very difficult being able to define a pricing system that will give the shareholders the desired profit. The first step was to design a new costing system adequate for the company

An identification of the accounting concept involved in the Home Depot concept is Operating leverage. Business managers apply operating leverage to magnify small changes in revenue into dramatic changes in profitability (Edmonds, Tsay, & Olds, 2011). Operating leverage comes into play when a firm has a combination of fixed and variable cost. According to Thomas P. Edmonds, Bor-Yi Tsay, & Philip R. Olds explained that when all costs are fixed, every sales dollar contributes one dollar toward the potential profitability of a project (2011). They further explained that a simple small change in a business' sales volume can significantly affect the company’s profitability (2011).

Using the existing method, Midwest Office Products was not adequately determining the profitability of each order based on the true costs of both the delivery mechanism (freight vs. truck delivery) and the late payments (interest of 1% per month). As a result, certain orders (like #2 above) appear profitable until the late payments and delivery costs are taken into account. These costs cut out MOP’s entire margin and left them in the red on order #2 which was too small to cover the delivery costs.

From the aspect of cost center[1], tracking information of cost expenses would facilitate management to figure out the productivity by an unbiased measurement. In operations, company units such as the human resources department or marketing department, except sales department, are not engaging in market share or generating revenues. In contrast, these departments contribute their capabilities for internal supports and help sales department turn profits to the company. Those efforts are a part of product costs and also are a norm for performance evaluation.

The new system provided a better way to identify hidden costs and determine if customers are causing profits or losses. They will be able to show profits and losses by product, customer, and market. The limitation of this new system may be the cost of implementing this new methodology and training employees how to use it.

Ms. Ringer is largely supporting operations through her line of credit versus managing costs. In review of the operating costs, overhead and administration have increased by 8% from 2008-2011 or $116,870. In addition salary dollars continue to increase from 2008-2011 by $111,150 with no efforts to flex. The other expenses are staying steady in proportion to gross revenues. There may be opportunities in these areas however salaries and overhead is the greatest opportunity to scale back costs and contribute to increased net income and ultimately positive cash flows. Flexing salaries and benefit to 44% of gross revenue and reducing overhead and expenses to 10% of gross revenue is recommended for Ms. Ringer to increase net income to $152,956 and equity to $240,214 (exhibit Operating Statements-2012 proforma).