1. What strategies and tactics did the management of Super Bakery, Inc. use to increase sales and growth?
-Super Bakery has really taken a unique approach to running their business. They own this company that manufacture and sales doughnuts, but not really. In reality they bring many companies together under their product umbrella to manufacture, sale, store, and distribute doughnuts. By outsourcing all of this work they are able to "maximum value to the company while making the minimum investment in permanent staff, fixed assets, and working capital (Paul D. Kimmel, 2009)." By keeping all of these costs off their books there are a lot of variables that would muddy their books not an issue. Also, by using these outsourced recourses the company can continue to ensure that they are always getting the all aspects of business done at the lowest costs. Other companies that specialize in these areas will be able to give them much lower costs because of the expertise and synergies they have developed through experience and other business that might be using their services.
2. Why did Super Bakery’s management think it was necessary to install an ABC system? Do you agree with their reasoning? If you disagree, identify your recommended costing system, including your rationale, to management.
-The ABC System makes perfect sense for Super Bakery because of their business model. They are already breaking their business up into segments for sales, manufacturing, etc. These segments could easily translate into Activity Cost Pools. From there it would be easy to breakdown those costs further to cost drivers and for cost to be assigned according to the percentage of production of each specific product. I think this system would allow them to look at all orders that they are taking in and ensure that the appropriate costs are assigned to those jobs. This would allow the management team at Super Bakery to know if certain orders are bad for...