happy chips
Johanie Jean-Louis
11/11/2013
Business Logistics and Transportation
RUID- 144002630
Case 9 Happy Chips
1. The difference between activity based costing and segment portability analysis is that activity-based cost is a method for improving the accuracy of cost determination. To develop a system like this one needs to understand the relationship among resources, activities, products and services resources are spent on activities, products and services are a result of activities. Activity based cost can soundly estimate cost elements of product activities and services this helps the company eliminate products and services that are unprofitable and ineffective. Segmented portability analysis breaks down cost according to customers that demand the good or service the only cost relevant to a customer or will/ should serve as input in segment analysis this analysis grants clarity so one knows which customers are profitable and which one are unprofitable. I agree with manager Jake Williams who feels the grocery segment is most important because the largest percentage of business is concentrated in the grocery segment with 250 retail customer locations accounting for 2,100,000 annual sales and more than 74% of annual revenue it simply doesn't make sense to focus much if any attention 2towards mass merchandise segment that only counts for almost 12% of annual revenue the most attractive segment is grocery and most activity and resources should be focused on this particular segment strategically this would be the best decision .
Grocery Segment Profitability - (a little more than 74% or annual revenue) 122,418.75 this is profitability in dollar amount this segment brings in the most money this should be there main area of focus & concern.
Drug Segment profitability -( a little more than 14% of annual revenue ) 22,851.5 this is profitability in dollar amount.
Mass Merchandise segment profitability -(almost 12 %of revenue) 17,954.75 this is
11/11/2013
Business Logistics and Transportation
RUID- 144002630
Case 9 Happy Chips
1. The difference between activity based costing and segment portability analysis is that activity-based cost is a method for improving the accuracy of cost determination. To develop a system like this one needs to understand the relationship among resources, activities, products and services resources are spent on activities, products and services are a result of activities. Activity based cost can soundly estimate cost elements of product activities and services this helps the company eliminate products and services that are unprofitable and ineffective. Segmented portability analysis breaks down cost according to customers that demand the good or service the only cost relevant to a customer or will/ should serve as input in segment analysis this analysis grants clarity so one knows which customers are profitable and which one are unprofitable. I agree with manager Jake Williams who feels the grocery segment is most important because the largest percentage of business is concentrated in the grocery segment with 250 retail customer locations accounting for 2,100,000 annual sales and more than 74% of annual revenue it simply doesn't make sense to focus much if any attention 2towards mass merchandise segment that only counts for almost 12% of annual revenue the most attractive segment is grocery and most activity and resources should be focused on this particular segment strategically this would be the best decision .
Grocery Segment Profitability - (a little more than 74% or annual revenue) 122,418.75 this is profitability in dollar amount this segment brings in the most money this should be there main area of focus & concern.
Drug Segment profitability -( a little more than 14% of annual revenue ) 22,851.5 this is profitability in dollar amount.
Mass Merchandise segment profitability -(almost 12 %of revenue) 17,954.75 this is