A Case Study on Dakota Office Supply
Case: Dakota Office Products
1. Background Information
Dakota Office Products (DOP) is a regional office supply company with a strong reputation for customer service and quality supplies. Additionally, DOP is unafraid to adopt new services such as its desk top deliver option which delivers smaller orders directly to individual sites as well as its traditional commercial freight delivery. DOP has also introduced and Electronic Data Interchange (EDI) in order to ease data and payment transfer from and to customers as well as building a customer website that acts as an order and account interface for its customers.
2.1 People/Key Players
John Malone General Manager
Melissa…show more content… 2. Problem Statement
The existing traditional costing system is inadequate for Dakota Office Products because it is incapable of accounting for all of the known costs associated with its products and services.
3. Problem Causal Analysis
Since Dakota uses a traditional method of cost accounting they cannot identify areas of weakness or inefficiency in their pricing and how those inefficiencies translate to lower bottom line profits.
4. Management Theory, Process, or Approach
In implementing an activity-based costing program, Dakota will need to take steps to move away from their current cost accounting method. Ideally, a team of cost accountants and managers would work together to define and implement an ABC program (Latshaw & Cortese-Danile, 2002). This would entail an analysis of all activities, cost gathering, associating cost with activities, base-lining outputs, and cost analysis to determine the true cost for each activity identified.
My first recommendation would be to move as many customers as possible over to the internet based ordering and billing system. Approximately 9,500 labor hours can be removed from the current ordering process. Additionally, the cost drivers of processing manual orders and the manual entry of item would be