Case Analysis Dakota Office Products

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Dakota Office Products Cost Analysis

October 26, 2011 Case Analysis: Dakota Office Products

1.0 Background Information Dakota office Products (DOP) are regional distributors for office supplies and the major clientele served by the company included institutional and commercial clients. They deal with all types of office supplies and writing equipment. The company has been able to uphold a great reputation for itself. The company has also arranged many distribution centers where the shipments were required to be unloaded and packed into are cartons then delivered directly to customers.

1.1

People / Key Players

John Malone, General Manager Melissa Dunhill, Controller Tim Cunningham, Director of Operations

1.2 Chronology of Key Relevant Events DOP introduced electronic data interchange in 1999 and in 2000 DOP started accepting orders online via its new website. The same year DOP introduced its website DOP started offering the

convenience of delivering the packages of supplies directly to individual locations at the customer’s site, this was called “desk top”. The financial results of calendar year showed that DOP sales increase yet it has suffered its first loss in history.

1.3 Key Facts The management is faced with major pricing and costing issue for its products. The company has been using the traditional costing method to compute the cost of the product provided to the clients. The company then adds a markup as per its policy to come up at the selling price of the product. As a result of not following the Activity Based Costing, the company has not been able to cost the products realistically. This has led to mispricing of the products and as a result, an overall loss to the company.

1.4 Concepts Some important terms are the Electronic Data Interchange (EDI) system implemented by DOP in 1999 and a new internet site that allowed customers to arrive automatically so that clerks would not have to enter customers and order data manually....
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