Fedex Form 10-K

g. Costs that are debited directly to expense accounts when the costs are incurred. Period Costs

The advantages of Dells model are: The internet allows Dell an extensive scope and reach for its products at a relatively low price (Dedrick and Kraemer 2001). Using the internet Dell has been able to automate many of its business functions, such as product configuration, order entry and technical support (Dedrick & Kraemer 2001), therefore the company can achieve higher revenues without customer service costs increasing greatly. Online configuration ensures that the customer gets exactly what they want. Dells build to order strategy means that inventory levels are low, they only hold approximately 4-8 days of stock, therefore inventory costs are low (Breen 2004).

Period cost are cost related to selling and administrative expenses. Product cost are costs related to manufacturing of goods. Classifying period cost as product cost will decrease the expenses, thus increase the operating income.

Inventory turnover – increase of 634.9% at Dell against 202% at Compaq shows the competitive advantage if Dell in managing and maintaining its stocks

Dell’s acquisition strategy is successful as the company strives to dominate the global market in technology resulting in higher margin offerings and short term profitability. The company’s most recent acquisition is EqualLogic, Compellent storage, and KACE systems management technology has led to Dell growing margin even as it increasingly sheds many of the third party products for which it receives lower margins (Kovar, Joseph F., 2011).

Monthly operating expenses consist of the following (if these are cash expenses, they are paid when incurred):

Operating costs are expenses supplementary with the operations, maintenance and administration of a business on a daily basis. The operating cost is a component of operating income and is customarily included on a company’s income statement. A business's operating costs consist of f two core constituents, fixed costs and variable costs. A fixed cost does not change with an increase or decrease in sales or productivity and must be paid regardless of the company's activity or performance (Lowengrub, 2016). A variable costs changes in direct proportion to the change in production. If production increases, those costs are variable and linked to the change in production.

The proposal presented herein gives the background information of Dell Computers Corporation highlighting the current operation for the manufacture of computers. The proposal highlights the potential of the company to increase its market share and profitability through change of its culture from order based to inventory base.

Dell 's Competitive advantage lied in its very low or negligible inventory that it held. Also, because of its direct sales strategy it eliminated the intermediaries. Dell also had a first mover advantage in the direct selling model.

The Dell Computer Corporation was founded in 1984 by Michael Dell, who began the company by refurbishing IBM clones out of his dorm room for extra money. From the beginning and through the 1990’s, the company grew quickly and was very successful. Dell used a cost leadership strategy and focus on creating products that were already in the market place, but changed the timing of production and the method of distribution that was in place with the company’s competitors by assembling computers to order and selling directly to the customers. The company focused on creating value for customers and meeting their needs, but into the

The efficient roll-out of new products may be impacted negatively due to lack of communication between these two key departments. Also suppliers were picked based on cost, and little regard was given to the overall supply chain cost.

Dell Computer Corporation, the second leading computer manufacturer, began by selling PC's directly to consumers. Their first customers ordered over the phone and Wold Wide Web. To this day Dell still has no brick and mortar retailers and does not distribute its product to resellers. In the business to business market Dell has excelled, but until recently, the profitable company was not so profitable in the home-user segment,(Industry Survey, Apr. 2000). The company's new strategy, to gain market share, has proven very effective. Dell now posts a 62% gain in world wide PC shipments and a 2.6 share-point gain from 8.2% in `98 to 10.8% in `99,(Industry Survey, Apr. 2000). Recently Dell's presence has been felt in the growing PC market. This has forced competitors to be very careful about pricing in this highly elastic industry. Dell's profitability is also notable, since it has minimal distribution costs and does very little advertising Dell is extremely profitable. However, rough times may be on the horizon for Dell. Analysts are worried because profit growth

Dell has also employed two major strategies, customization options for clients who demand cutting edge technology along with a build-to-order option. As a result this has drastically increased its value to customers and also allows Dell to carry fewer inventories which could in turn result in obsolesce. In other words the overproduction is greatly reduced as the production is essentially in line with the demand and the market.

Thus, the centerpiece of Dell Inc. 's current marketing strategy is direct marketing to the enduser.

Period costs are all costs in the income statement other than cost of goods sold. These costs are usually associated with the selling function of the business. The bird feeder division has the following period costs: shipping, sales commissions, office rent, advertising, liability insurance, office depreciation, and office salaries. After determining if costs are either product or period costs it is important to