in our feature story about super bakery inc, we described a virtual corporation
ID: 2386475 • Letter: I
Question
in our feature story about super bakery inc, we described a virtual corporation as one that consists of a core unit that is supported by a network of outsourced activities. a virtual corporation minimizes investment in human resource, fixed assets, and working capita. tha application of ABC to super bakery inc is described in an actricle tittled ABC in a virtual corporation by tom davis and bruce darling in the october 1996 isse of mamagement accountinginstuction
assume you are the owner of a virtual corporation. using the article as a basis for your communication, write a summary that answers the following questions
1 what unique strategies and tactics did super bakery's management implement that caused sales to take off and continue to grow an average rate of 20%?
2 why did super bakery's management feel that it was necessary to install an ABC system?
3 what is the main difference between super bakery's ABC system and other manufacturers' ABC system?
Explanation / Answer
1. 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%? Super Bakery is a virtual corporation, in which only the core, strategic functions of the business are performed inside the company. The remaining activities – selling, warehousing, and shipping are outsourced to a network of external companies. This was done because add maximum value to the company while making the minimum investment in permanent staff, fixed assets, and working capital and to increase the grow at an average rate of 20% 2. Why did Super Bakery’s management feel that it was necessary to install an Activity-Based Costing (ABC) system? Because costs of each order is not accurately assigned according to the orders placed by different market places so Management suspected a wide variation in the cost of serving customers in different parts of the country actuality, orders with high profit margins were subsidizing orders with low profit margins. Super Bakery desired a system that would more accurately assign the costs of each order. With such a system, pricing could be improved. 3. What is the main difference between Super Baker’s ABC system and other manufacturer’s ABC system? The main difference between Super Baker’s ABC system and other manufacturer’s ABC system is Baker’s activity-based costing system showed that the costs and profit margins on each sale vary significantly and in other manufacturer’s ABC system they concentrate on costs associated with the activities performed in the business –manufacturing, sales, warehousing, and shipping etc.
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