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Midwest Office Products Case Essay

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Midwest Office Products 1. Calculate the following a. The cost of processing cartons through the facility i. Warehouse Expense ($2,000,000) + [Personnel Expense – Delivery Driver Expense] ($2,320,000) = $4,320,000 1. $4,320,000 / 80,0000 = $54/carton Cost of entering customer orders | | Order entry expenses | | $840,000 | | hours worked per employee (16) | 1,500 | | | Total hours worked | 24,000 | | | Cost per hour worked | | $35 | | | | | | time to enter information (hours) | 0.15 | $5.25 | /hour | time per line item (hours) | 0.075 | $2.63 | /hour | time to verify electronic info (hours) | 0.10 | $3.50 | /hour | 1500 is used because you are trying to determine…show more content…
Midwest Office Products’ (MOP) current costing system, is not very accurate because it includes all expenses in each order, although that specific order may not utilize a certain activity that causes that expense. For instance, all orders include both desktop delivery expense and freight expense, when only one of those delivery methods are utilized. Through the ABC method you can see which delivery methods are more damaging to your bottom line, since ABC allows you to focus on the activities causing that cost. By
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