Please open this link: Midwest Office Products case study and answer the followi

Question

Please open this link: Midwest Office Products case study and answer the following questions:

Based on the interviews and data in the case, estimate:

The cost of processing cartons through the facility

The cost of entering electronic and manual customer orders

The cost of shipping cartons on commercial carriers

The cost per hour for desktop deliveries

Using this cost driver information, calculate the cost and profitability of the five orders in Exhibit 2. Compare these costs and profitability to those calculated by Midwest’s existing costing system?

Explain the difference in profitability of the five orders calculated by the ABC system and the company’s existing cost system.

Based on your analysis above, what actions should John Malone take to improve Midwest’s profitability?

What issues, barriers, or concerns arise in your organization

Based on your reading of the case identify the main issues of the case and answer the questions in your own words. To better understand the case, you may also research the Internet, journals, and library reference materials and provide an up to data analysis.

Explanation / Answer

1.Based on the interviews and data in the case, we calculated the following information.

(1)The cost of processing cartons through the facility:

Personnel expense (warehouse, truck drivers)2,570,000
¡ÐCompensation for truck drivers   ( 250,000)
Warehouse personnel expense   $2,020,000
¡ÏWarehouse expenses (excluding personnel)   2,000,000
   $4,020,000

(2)   The cost of entering electronic and manual customer orders:

Order entry expenses   $ 840,000

(3)   The cost of shipping cartons on commercial carriers:

Freight   $ 450,000

(4)   The cost per hour for desktop deliveries:

Compensation for truck drivers   $250,000
¡ÏDelivery truck expenses       200,000
The cost for desktop deliveries   $450,000
¡Ò 6,000 hrs (1,500hr ¡Ñ 4)   ¡Ò   6,000
         $ 75

2.   The cost and profitability of the five orders, using the cost driver information and its existing costing system:
(1)   The ABC system:

Order   1       2       3       4       5
Sales   $610.00       $ 634.00       $6,100.00       $6,340.00       $6,100.00
Cost of goods sold   500.00       500.00                 500.00            500.00

1.Based on the interviews and data in the case, we calculated the following information.

(1)The cost of processing cartons through the facility:

Personnel expense (warehouse, truck drivers)2,570,000
¡ÐCompensation for truck drivers   ( 250,000)
Warehouse personnel expense   $2,020,000
¡ÏWarehouse expenses (excluding personnel)   2,000,000
   $4,020,000

(2)   The cost of entering electronic and manual customer orders:

Order entry expenses   $ 840,000

(3)   The cost of shipping cartons on commercial carriers:

Freight   $ 450,000

(4)   The cost per hour for desktop deliveries:

Compensation for truck drivers   $250,000
¡ÏDelivery truck expenses       200,000
The cost for desktop deliveries   $450,000
¡Ò 6,000 hrs (1,500hr ¡Ñ 4)   ¡Ò   6,000
         $ 75

2.   The cost and profitability of the five orders, using the cost driver information and its existing costing system:
(1)   The ABC system:

Order   1       2       3       4       5
Sales   $610.00       $ 634.00       $6,100.00       $6,340.00       $6,100.00
Cost of goods sold   500.00       500.00                 500.00            500.00

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