Office Dakota Products Case Analysis Course: BUSA 5061 Managerial Accounting Students Name: Teresa Willette Professors Name: Dr. Conner/Dr. Pollard Date 3/20/2011 Executive Summary The following analysis is written for Dakota Office Products to evaluate current business operations and recommend future actions necessary to ensure company success. In the analysis of the company we will identify inefficient business practices that have led to the companies first profit loss in its history. We will evaluate
Premium Costs Management accounting Cost accounting
Dhara Rami ACCT 442 Dr. Szendi Date: November 2‚ 2014 Towson University Dakota Office Products Case Analysis Dakota Office Products Case Analysis Introduction Dakota Office Products (DOP) is a reseller and supplier of office products. DOP is a regional entity. It has institutional and commercial businesses as clients. DOP has a good loyalty and customer confidence from its client. In order to increase profitability‚ DOP started “Desk top” delivery for its loyal customers. In this service
Premium Costs Cost Accounts receivable
Dakota Office Products Background • Regional distributor of office supplies to institutions sand commercial businesses • Comprehensive product line • Excellent reputation • Several distribution centers Process • Old: • After customer orders received‚ orders were accumulated within the warehouses and prepared for shipment • Used commercial truckers to deliver • New Option: • “Desk Top Deliveries” • Delivered products directly to locations • Small fleet of trucks • 2% upcharge on products Pricing
Premium Electronic Data Interchange Question Consultative selling
Questions: Dakota Office Products 1. Why was Dakota’s existing pricing system inadequate for its current operating environment? Dakota’s existing pricing system was inadequate for its current operating environment because the pricing was based on traditional allocation of overheads. The result of which were that the actual costs incurred for fulfilling the orders of customers were not ascertained. There were two effects of this method. First‚ the overall prices of all the products increased.
Premium Costs Price Accounts receivable
MAC II Dakota Office Products Q1) Why was Dakota’s existing pricing system inadequate for its current operating environment? The existing policies being followed by Dakota regarding Accounts receivables are a major issue‚ which is affecting its payment of working capital line of credit (@10%). Customer A pays its bill within 30 days‚ whereas B takes up 90 days or more. Dakota can achieve sufficient liquidity‚ if it tightens its credit policy. | | | | | 2) Develop an activity
Premium Accounts receivable Cost driver Profit
the order‚ larger orders were more profitable than small orders. Based upon customer order size‚ prices should have been varied and the cost determination of the DOP should have been evaluated as it generated a loss. 2. Develop an ABC system for Dakota based on Year 2000 data. Calculate the activity cost-diver rate for each activity in 2000. a. Order Entry i. Order Entry Expenses/Order Lines ii. $800‚000/150‚000= $5.3/line b. Carton Processing i. (90% of warehouse personnel expense + Cost
Premium Profit Variable cost Costs
1 Dakota current allocates warehousing‚ distribution and order entry cost equally to each customer. DOP’s pricing system is generally independent of the specific level of service provided for customers. They just chose a single cost drive. However‚ it’s not believable and proper to use this simple method to analyze costs when costs are more complex. So we need to use activity-based cost system to chose different cost drives and allocate costs based on the activity. 2 We identify four different activities
Premium Cost Costs Expense
Why was Dakota’s existing pricing system inadequate for its current operating environment? - profits only when clients placed large orders for cartons - real drop of profit if many clients place small orders - wrong cost determination for individual customers - wrong cost determination for new services provided by DOP (to small charges for the “desktop” delivery‚ then the actual cost of it) 2. Develop an activity-base cost system for Dakota Office Products based on Year
Premium Profit Consultative selling Costs
assigned and allocated to products and services delivered to clients. This system has proven beneficial for companies where production operations are high labor intensive and overhead costs are smaller part of total costs. Nowadays‚ when automation and technology are ubiquitous overhead costs make up much higher percentage and are often lumped together with direct labor costs. An ABC approach would be much more appropriate for the DOP’s business as it will calculate costs of products and services based
Premium Costs Variable cost Cost driver
CONSULTAS Nombre diana carranza Consulta cuanto puedo invertir para formar una empresa constructora Depende cuanto en activos asuma o si toma servicios. Nombre LUCIA SUÁREZ QUEREVALU Consulta Hola‚ quisiera que me ayuden a crear mi peluquería en Oquendo‚ pertenece al distrito de Ventanilla. Qué hago primero?‚ monto la peluquería ‚o antes saco una licencia de funcionamiento y su RUC?. Aun no he pedido el préstamo‚ pero he estado averiguando precios de muebles y equipos y me parece que saldrá algo
Premium Perú Empresa Conocimiento