Costing Methods
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Costing Methods
Costing Methods
Super Bakery, Inc., was established in 1983 by a former Pittsburgh Steeler’s running back Franco Harris. Super Bakery specializes in donuts and other baked goods into the food market. The strategies used by the management of Super Bakery will be discussed within this paper, along with why the management of Super Bakery made the decision to install an ABC system. The discussion will also talk about which system would have been better for Super Bakery a job order cost system or a process order cost system.
The beginning of Super Bakery the management at that time decided to use a strategy that would only handle the core functions of the business, while outsourcing all other functions of the business to brokers, which would handle the sales of the bakery goods. Super Bakery also contracted out manufacturing, warehousing, and shipping to keep cost down to a minimum. Super bakery was able to pull together a number of companies together and organize the work flow, which was a strategy of Super Bakery to add maximum value but at the same time reduce the amount of investment Super Bakery would have to make in permanent staff, fixed assets, and working capital. Super Bakery using this type of strategy allowed the company to leverage the maximum core competencies of the business, while adding maximum value to the company.
As time passed and the bakery industry grew more competitive Super Bakery management felt they needed to add an ABC system because of a wide variation in cost of serving customers in different parts of the country. Super Bakery was faced with the traditional method of cost, which was spread across its entire customer base. The objective of Super Bakery was to control the cost of outsourced activities. Super Bakery wanted to identify orders with high profit margins at the same time it wanted to accurately assign the cost of each order. The main purpose Super Bakery management wanted to install the new ABC system was to...
Costing Methods
Super Bakery, Inc., was established in 1983 by a former Pittsburgh Steeler’s running back Franco Harris. Super Bakery specializes in donuts and other baked goods into the food market. The strategies used by the management of Super Bakery will be discussed within this paper, along with why the management of Super Bakery made the decision to install an ABC system. The discussion will also talk about which system would have been better for Super Bakery a job order cost system or a process order cost system.
The beginning of Super Bakery the management at that time decided to use a strategy that would only handle the core functions of the business, while outsourcing all other functions of the business to brokers, which would handle the sales of the bakery goods. Super Bakery also contracted out manufacturing, warehousing, and shipping to keep cost down to a minimum. Super bakery was able to pull together a number of companies together and organize the work flow, which was a strategy of Super Bakery to add maximum value but at the same time reduce the amount of investment Super Bakery would have to make in permanent staff, fixed assets, and working capital. Super Bakery using this type of strategy allowed the company to leverage the maximum core competencies of the business, while adding maximum value to the company.
As time passed and the bakery industry grew more competitive Super Bakery management felt they needed to add an ABC system because of a wide variation in cost of serving customers in different parts of the country. Super Bakery was faced with the traditional method of cost, which was spread across its entire customer base. The objective of Super Bakery was to control the cost of outsourced activities. Super Bakery wanted to identify orders with high profit margins at the same time it wanted to accurately assign the cost of each order. The main purpose Super Bakery management wanted to install the new ABC system was to...