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Super Baker

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a) What unique strategies and tactics did Super Bakery’s management implement that caused sales to take off and continue to grow at an average rate of 20%?

There were basically four strategies implemented that helped sales to grow annually at a 20-30% rate. The first was targeting school systems and creating a healthier product that met government guidelines. The second was keeping the product fresher; longer by refrigeration and vacuum sealing thus allowing for national distribution. The third strategy involved a variety of ways to support customers. According to Davis and Darling (1996), “ …helping customers obtain lower prices by acquiring government-supported commodities, cooperating with noncompeting suppliers by providing complete prepackaged meals to schools, and helping distributors reduce inventory carrying costs and avoid stock outs through reliable, just-in-time delivery” (p. 20). The fourth strategy is becoming a virtual corporation which does not manufacture, sell, or distribute the company’s product (Davis & Darling, 1996). This helps to reduce expenses and capital investments, keeping internal staff to a minimum.

b) Why did Super Bakery’s management feel that it was necessary to install an ABC system?

A major hurdle Super Bakery’s management had to face was controlling the functions outside of the company. Quality and cost were of major concern when outsourcing sections of the manufacturing and distribution process. A standard costing system would not provide accurate costing for each customer as each customer’s needs vary. Implementing an activity based costing (ABC) system would provide accurate information. According to Davis and Darling (1996), “Assigning costs accurately to each account would allow the company to access the profitability of different customers” (p. 22). The ABC system ensured accurate pricing for all customers and

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