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Allied Office Products Case

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1)

Activity Cost Pools Storage Requisition Handling Basic Warehouse Stock Selection "Pick-pack" Activity Data Entry (Processing) Desk top delivery Total

Budgeted Activity Cost $1,550,000.00 $1,801,000.00 $761,000.00 $734,000.00 $612,000.00 $250,000.00 $5,708,000.00

2)

Customer A Storage Requisition Handling Basic Warehouse Stock Selection Pick-Pack Activity Data Entry (Processing) Desk Top Delivery Inventory Holding Cost Freight Cost

Activity Rate $4.43 $5.81 $0.98 $1.05 $0.79 $29.41

Customer B Storage Requisition Handling Basic Warehouse Stock Selection Pick-Pack Activity Data Entry (Processing) Desk Top Delivery Inventory Holding Cost Freight Costs

Activity Rate $4.43 $5.81 $0.98 $1.05 $0.79 $29.41

3)

Profitability Customer A Customer B

Annual Sales $79,320.00 $79,320.00

Profitability Customer A Customer B

Annual Sales $79,320.00 $79,320.00

Activity Cost Driver Number of Cartons Number of Requisitions Line per Requisition 90% of Lines Labour per Line Cost per request

Budgeted Activity 350,000 310,000 775,000 697,500 775,000 8,500

Activity 350 364 910 350 910 0

ABC Cost $1,550.00 $2,114.72 $893.56 $368.32 $718.61 $0.00 $1,950.00 $2,250.00 $9,845.21

Total Cost

Activity 700 790 2500 200 2500 26

ABC Cost $3,100.00 $4,589.65 $2,454.84 $210.47 $1,974.19 $764.71 $6,500.00 $7,500.00 $27,093.85

Total Costs

ABC Costing (service fee) $9,845.21 $27,093.85 Total Traditional Costs (service fee) 16,100 16,100 Total

ABC Costing (product cost) 50000 50000

Traditional Costs (product cost) 50000 50000

Activity Rate $4.43 $5.81 $0.98 $1.05 $0.79 $29.41 $42.47

364 Requisitions 910 lines 350 cartons ( need 500 to fill a whole order - otherwise it's pick-pack lines) inventory = $15,000 freight cost = $2,250 no requests for desktop

Customer B 790 requisitions 2500 lines 700 cartons (500 items = whole carton

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