caseism

Dakota Office Products Case Solution & Answer

 Dakota Office Products Case Solution 

ANSWER NO 1

There are a few office items like pen, pencils and markers which are selling by Dakota office items effectively. Although these organization’s has low profit margin capacities and higher competitive environment. Every items are selling by explicit customary technique for costing. The organization utilizes the markup of 15% to consolidate the stockroom, dissemination and cargo.

The cost is again increased to meet the costs brought about for general and selling and afterward a stipend for benefit is added to the expense of the item which then set the cost of an item. These markups are set on the basis of expenses.

As the organization does not have the new reports of the expenses related by the drivers, so the item cost is unidentified until further notice. Along these lines, the organization is permitted to audit the expense of the items dependably.

The costs at that point can be designated likewise to the manual orders and the work area orders relying upon the quantum of the orders put by the client. Whereas, the profitability and revenues of the company can also be depends upon the nature of the orders decree by clients.

ANSWER NO 2

The activity costing system is useful for the current operations. In this system first we identify the major activities, so the main activities that are performed by Dakota process of cartons in and out of the facility, order handling, data entry and new desktop delivery service. And the cost drivers were number of cartons”, “number of orders” and “number of items in the orders’. The details of these driver cost and activities was mentioned in the case. The cost driver are useful for the activities. Because the number of drivers are associated with the cost. With the increase in drivers will increase the cost. And cost drivers can allocate the activity cost of the product. The cost drivers also help to determine the cost of delivery of the product. Because the number of cartons will determine the freight charges. The cost drivers are proportional to the cost of the activity. And the cost of the drivers allocate the cost to the product.

Rates of activity cost driver

Activity 1: Incoming cartons and outgoing facility

Rate: 90% personal warehouse expense + Cost of purchased items)/rate of carton processing

= (90%*2,400,000+35,000,000)/80,000

=464.5 5/per carton

Activity 2: delivery service

Rate= 1 0% personal warehouse expense + truck delivery expense)/rate of desktop delivery

= 0.1*2,400,000+200,000)/2000

=220 $/per carton

Activity 3: Order handling

Rate: 90% personal warehouse expense + Cost of purchased items)/rate of carton processing

= (90%*2,400,000+35,000,000)/80,000

=464.5 5/per carton

Activity 2: delivery service

Rate= 1 0% personal warehouse expense + truck delivery expense)/rate of desktop delivery

= 0.1*2,400,000+200,000)/2000

=220 $/per carton

Activity 3: Order handling

Rate= Warehouse Expenses + Freight)/ number of orders

= (2,000,000+450,000)/(1 6.000+8,000)

=102.08 $/per order

Activity 4: data entry

Rate=Order entry expenses/Order lines

=800,000/150,000

=5.3 orders/per line

ANSWER NO 3

Customer A Profitability:  Sales + cost of sales + Gross margin + Total overheads

=$103,000+$85000+$18000+16846
=$1154

Customer A Relative %

=121.2% + 100.0% + 21.2% + 19.8%

=1.4%……………………..

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.

Share This

LOOK FOR A FREE CASE STUDY SOLUTION

JUST REGISTER NOW AND GET 50% OFF ON EACH CASE STUDY