Dakota Office Products

Dakota mightiness Products Study Case Why was Dakotas existing pricing system incompetent for its current direct environment? profits only when clients placed large rates for cartons real drop of profit if many clients place small orders wrong court determination for unmarried customers wrong personify determination for new services provided by DOP (to small charges for the desktop delivery, then the actual cost of it) 2. Develop an activity-base cost system for Dakota Office Products based on Year 200 data. Calculate the activity cost-driver rate for each DOP activity in 2000. action at law cost-driver rates use wizard procedure cartons in and out of the facility Rate=(90% of Warehouse Personnel Expense + Cost o Items Purchased)/cartons processed Rate=(90%*2,400,000+35,000,000)/80,000=464. 5 $/per carton Activity two the new desktop delivery service Rate=(10% of Warehouse Personnel Expense + Delivery Truck Expenses)/desktop deliveries Rate=(10%2,400,000+200,000)/2000=2 20 $/per carton Activity trinity order handling Rate=( Warehouse Expenses + Freight)/ number of orders Rate=(2,000,000+450,000)/(16,000+8,000)=102. 08 $/per orderActivity Four data entry Rate= hallow entry expenses/ effect lines Rate=800,000/150,000=5. 3 orders/per line 3. Using your answer to question 2, calculate the profitability of node A and customer B. Activity One process cartons in and out of the facility Number of cartons ordered Activity Two the new desktop delivery service Number of desktop deliveries Activity Three order handling Number of orders (manual + EDI) Activity Four data entry Number of line items Manufacturing Overhead cost-driver rates Customer A Customer B Customer ADakota Office ProductsDakota Office Products Study Case Why was Dakotas existing pricing system inadequate for its current operating environment? profits only when clients placed large orders for cartons real drop of profit if many clients place small orders wrong cost determination for individual customers wrong cost determination for new services provided by DOP (to small charges for the desktop delivery, then the actual cost of it) 2. Develop an activity-base cost system for Dakota Office Products based on Year 200 data. Calculate the activity cost-driver rate for each DOP activity in 2000.Activity cost-driver rates Activity One process cartons in and out of the facility Rate=(90% of Warehouse Personnel Expense + Cost o Items Purchased)/cartons processed Rate=(90%*2,400,000+35,000,000)/80,000=464. 5 $/per carton Activity Two the new desktop delivery service Rate=(10% of Warehouse Personnel Expense + Delivery Truck Expenses)/desktop deliveries Rate=(10%2,400,000+200,000)/2000=220 $/per carton Activity Three order handling Rate=( Warehouse Expenses + Freight)/ number of orders Rate=(2,000,000+450,000)/(16,000+8,000)=102. 08 $/per orderActivity Four data entry Rate=Order entry expenses/Order lines Rate=800,000/150,000=5. 3 orders/per line 3. Using your answer to qu estion 2, calculate the profitability of Customer A and Customer B. Activity One process cartons in and out of the facility Number of cartons ordered Activity Two the new desktop delivery service Number of desktop deliveries Activity Three order handling Number of orders (manual + EDI) Activity Four data entry Number of line items Manufacturing Overhead cost-driver rates Customer A Customer B Customer A