Total Forms Control Case Summary

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.

The second problem is that sales are declining even though variances are still favorable. The current standard costing system is rewarding managers and employees even though sales are declining. As mentioned above the budgeted rates need to be lowered. With the decline in sales ChillOut Corporation needs to become more competitive in this tough economy. To be able to accomplish this you need to lower your sales price per case. ChillOut has had a gross margin between 15% and 20% and if employees are able to lower the actual costs even more, the corporation can afford to lower the sales price to attract more customers. Since frozen food products are undifferentiated, it is hard to retain buyers and maintain brand loyalty so it very important to keep prices low. It seems that the purchasing department has never reported any conflicts or grievances with

Activity-based costing takes a different approach, so that the costing might not be at the route level, but based on other means of breaking the company's activities down. At FedEx, a good way of breaking down costs is by customer. For example, some customers are served by multiple couriers, but there is also the question of where the customer sends their packages to, and what type of packages they send. These are things that FedEx accounts for in its pricing scheme already. Packages that are larger cost more; packages that go farther cost more. But there is more that goes into servicing these accounts. For example, accounts have sales and service representatives. Typically, these have large territories, so the expectation is that most accounts will require little service beyond that which the courier provides. A rep might visit a medium-sized customer once a year, and a large customer 2-3 times per year. A station manager might deal occasionally with the largest customers in the area. A

Student responses or discussion of this question should incorporate a complete list of customer benefits as well as customer costs (value being of function of benefits minus costs). By this point, the benefits should be easily identified as they have already come out in answering the previous questions. The benefits received by the customer could be identified in terms of need/want fulfillment. However, the cost factor has not been discussed. The most obvious cost is

Activity Based Costing (ABC) is more relevant than traditional costing in companies, where product mix is diverse in; batch sizes, physical sizes, degree or complexity, and raw material characteristics. ABC will also provide more decision useful information for the service industry, characterized by diversity in range of services provided. If the products in a plant or services provided posses similar characteristics, wither volume based or an activity based cost driver will provide reasonably accurate costs. The strategic goal of ABC is to provide decision useful cost and profitability information for optimal pricing decisions, appropriate product mix, and

Activity-based costing is a suitable and appropriate method for companies with multiple products or services who are having problem of inaccurate costing information and need to know which products are really profitable and which are the one that is making loss. For

Activity based costing (ABC) assigns processing overhead costs to products in a far more rational manner than the traditional methodology of simply allocating costs based on machine time. Activity based charging first assigns costs to the actions that will be the source of the overhead. After that it assigns the cost on those activities and then the merchandise that demand the actions.

Activity-based costing reveals that this analysis is faulty. Using activity based costing, we find out how much work goes into the sales for each category. The results are as follows:

Both traditional costing and activity based costing methods estimate overhead costs connected to production and allocate these costs to products based on a cost driver rate. The differences are in the precision and density of the two methods. Traditional costing is more basic and less accurate than ABC, and typically gives overhead costs to products based on a subjective average rate. ABC is more complicated and more accurate than traditional costing. This technique gives indirect costs to activities and then gives the costs to products based on the products’ practice of the activities. It is widely known that the traditional costing system uses a single, volume based cost driver. This is why the traditional product costing system alters the cost of products. In most cases this type of costing system gives the overhead costs to products on

Activity-based costing differs from traditional costing systems in a number of ways. In activity-based costing, nonmanufacturing as well as manufacturing costs may be assigned to products. And, some manufacturing costs—including the costs of idle capacity--may be excluded from product costs. An activity-based costing system typically includes a number of activity cost pools, each of which has its unique measure of activity. These measures of activity often differ from the allocation bases used in traditional costing systems.

The assignment for this week’s paper is to discuss increasing product prices and implementing successful pricing strategies. The paper will discuss effective measures that can be instituted to increase prices and experience customer satisfaction at the same time. In addition, specific strategy will be analyzed for its success in price increases. This is always a sensitive subject both for the company selling the product and the consumer making the purchase. Companies increase prices due to a need in the financial area. However, the impact is always adverse for the consumer. Finding this balance can be somewhat complicated because it entails a lot of risk. The chance of losing loyal customers to competitors is a large risk.

The two countries I chose are China and Russia. The two activists I looked into are Liu Xiaobo from China, and Nikolai Girenko from Russia. Both activists are now dead, and both activists were heavily against nationalist extremism in their own country.

While analyzing how companies within the service industry utilize activity-based cost (ABC), Onat, Anitsal, & Anitsal, (2014), stated that “Activity-based costing (ABC) focuses on the idea that activities create costs, while products use activities to gain value added.” (pg. 150). In general, this means that the theory behind activity-based costing (ABC) method is that merchandises or services consume activities and activities consume resources. When used, activity based costing first recognizes key activities that create overhead costs. Secondly, the activities that have similar cost drivers are then categorized into cost pools, and finally allocates the total overhead costs for products and services by computing absorption rate of each cost pool, respectively. Some issues associated with activity-based costing (ABC) is that it is expensive to implement and data can easily be misrepresented. One of the critical issue company encounter while utilizing the activity-based costing method is that it is difficult to separate some overhead costs the CEO of the company

Many organisations have different products and services that they provide to their customers and it can be extremely difficult to disperse costs between them. Some may prefer to distribute variable costs evenly within cost objects or some may prefer to distribute costs per unit or batch taking into consideration other factors such as machine or labour hours. There are two main systems used; traditional costing and activity based costing (ABC). Included in this essay will be the definitions and comparisons of the two costing systems as well as how activity based costing can lead to higher profits. An example of a company will be given to see if adopting the ABC system can lead to an increase in profits and will then finish with a

Activity-based costing, or ABC, is defined as “a total quality management tool for cost and performance measurement of activities, resources, and cost object” (Narong 12). Activity-based costing allows business to accumulate information and data about operating costs of the company. Three things made this popular in the 1980s. First, it “eliminated the product cross subsidies inherent in cost accounting. Then, it revealed the sources of loss that were responsible for the decline in profitability. Third, it acted as a catalyst for decisions affecting profitability” (Turney 4). Activity-based costing allows firms activities to be identified. After the activities are identified, products are then assigned different indirect costs. Activity-based costing is sometimes referred to as horizontal or cross functional cost view. It provides