Activity-Based Costing: a Case Study on a Taiwanese

The week four individual paper addresses the implementation of Activity Based Costing (ABC) by Super Bakery, Inc., a virtual corporation founded by Franco Harris. Specifically, management strategies, the reasoning behind an ABC system, and the alternatives of a job order cost system or a process order cost system are assessed for this enterprise.

This paper provides a brief presentation of Activity-Based Costing methodology, how is used as well as its short comings.

The process outlined by Mr. James reflects a growing practice today. I was not surprised by the charge given us. Companies in the hotel industry are looking for and expecting a documented favorable financial return on their expenditures. Admittedly, sales and marketing has lagged behind other functions, such as lodging operations, in showing measurable profit results from its efforts. The new planning and budgeting process will be a challenge because it is “bottom-up” and profit driven rather than “top-down” and revenue driven. But it is a worthwhile undertaking to achieve profitability within two years. I hope the planning and budgeting process doesn’t turn into a cost-cutting exercise.

The hotel chain, Astor Lodge and Suites, Inc., operates 250 properties in 10 western and Rocky Mountain states. The company’s customer base primarily comprises business travelers. In addition, the locations of the properties surround airports, large regional shopping centers, and major highways close to suburban industrial sites as well as office complexes. Projections of 2005 fiscal year forecast a fifth consecutive year of a gross loss for the firm. The estimates include an anticipated $422.6 million in company lodging revenues but a net loss of $15.7 million for 2005. As a result, Joseph James, president and CEO of Astor Lodge and Suites, Inc., initiated a challenging goal for executive management to devise a strategy achieving net profits in two years and sustaining positive growth in the future.

Determining costs for services and products can be a challenging undertaking, especially for healthcare organizations. There are many different methods in determining which expenditures should be included within each calculation so administration can effectively manage the costs of the organization. For this exercise, activity-based costing (ABC) will be utilized to determine costs for procedures for a department within a hospital setting.

Hilton Hotels is one of the biggest players in the US lodging industry. It contributes to about 9% of the total rooms in US lodging market. It has presence in over 78 countries with more than 2500 hotels. Lodging industry is highly capital intensive industry, so to reduce capital expenditure Hilton Hotels opted for self-owned Hotels as well as franchising model with the real estate owners. One of the key features of lodging industry is low switching costs for customers. There is very little margin to differentiate from the major competitors in the industry which include Marriott international, IHG, Accor etc.

This paper will discuss and analyze the concepts of Activity- Based Costing (ABC) in the manufacturing industry. Specifically, the document will focus on General Motors (GM), and the innovation of one of their manufacturing facilities who used ABC to predict energy usage in the manufacturing of automobiles. The study yielded a successful ABC predictive energy model which provided a structure for competitive advantage for the corporation.

The company's failures are a result of cutbacks on both business and consumer levels. With decreasing travel, increasing fuel costs, rising energy expense, an abundance of new hotels entering the market, and over $1 billion in debt, Innkeepers USA was forced to file bankruptcy (McCarty & Kary, 2010).

1. Identify the flaws associated with the current method of assigning shipping and warehousing costs to Sharp’s products.

Within the luxury tier, many of the players do not actually own the hotels themselves, but instead manage the operation of the business, similar to that of FSH. In the luxury segment, competition for acquiring new management agreements becomes very high as hotel owners make their choices based on the quality and value of a company's management service and most importantly, its brand name. Moreover, guests who choose to stay in luxury hotels are commonly not very price sensitive, and thus it is essential that a hotel distinguish itself amongst its competition by providing value added services as well as maintaining an untarnished, reputable brand name and image.

The Ritz-Carlton Hotel Company operates within the upscale & luxury hotel industry. While it could be argued that Ritz-Carlton operates in the more broad and inclusive lodging industry, they offer a highly differentiated product and service and therefore find themselves operating in an exclusive industry alongside very few direct competitors, such as Four Seasons Hotels, HongKong and Shanghai Hotels, and Starwood Hotels & Resorts. Therefore when analyzing this industry I will not be including cheap hotels, motels, lodges, or inns, unless to offer potential substitutes to luxury hotels. In order to assess the attractiveness of the upscale & luxury hotel industry, an analysis of the general environment surrounding the industry must be

rising (Raab et al., 2009; Annaraud et al., 2008). Pavesic (1985) has initiated research in pricing and cost accounting for restaurants, introducing the concept of profit factor

C. T. Horngren, A. Bhimani, S. M. Datar, G. Foster (2005), 'Activity-Based Costing', Management and Cost Accounting (Prentice Hall Europe), 345-363

Activity-based costing – this is a flexible method of pricing that is being used increasingly in the travel and tourism industry. Its looks at all cost, fixed and variable and focuses on what drives them in order to arrive at a final price to charge.

The hotel industry is one of the most prolific industries in Australia due to its presence in society and, the impact it has on the nation’s economy. Advances in technology since the end of the 20th Century have allowed the service market of a hotel to develop rapidly (Hilton Melbourne South Wharf