Broadening Your Perspective
Broadening your Perspective
Broadening Your Perspective
ACC/561
November 28, 2011
Broadening Your Perspective
Super Bakery, Inc., a virtual organization since 1983, has continually grown in market share and has become a leading competitor for other institutional bakeries, (Davis & Darling, 1996). The success of this company lies largely with the strategies that were implemented and the use of an ABC costing system. Both of these concepts will be explored as well as whether or not the use of other costing systems could be appropriate for this company.
Strategies
Super Bakery faced the challenges of breaking into an already mature market that had seen little growth. In order to become a competitive figure, the company had to be strategic in how best to proceed. The first move consisted of targeting school systems. By producing donuts that were USDA approved and tasty as well, annual sales grew.
Secondly, Super Bakery lost the restrictions of producing fresh baked goods by refrigerating and vacuum sealing their products. This allowed the company to grow outside of the local market and ship their products nationally. With such a large customer base, the company wanted to vamp up ways to support and serve the new market. Super Bakery acquired lower pricing for distributors and schools through government-supported commodities, pre-packaged meals for schools thereby reducing distributor’s inventory carrying costs. Lastly, by contracting out major functions of the business, overhead and capital investments were kept at a minimum, (Davis & Darling, 1996).
ABC Costing System
In any organization assigning costs correctly allows management to track profitability and performance. Super Bakery decided to use the ABC costing system for these very reasons. “Through the use of a rational database, Super Bakery’s management is able to examine costs by product, customer, order, broker, territory, department, manufacturer, and common carrier,” (Davis
Broadening Your Perspective
ACC/561
November 28, 2011
Broadening Your Perspective
Super Bakery, Inc., a virtual organization since 1983, has continually grown in market share and has become a leading competitor for other institutional bakeries, (Davis & Darling, 1996). The success of this company lies largely with the strategies that were implemented and the use of an ABC costing system. Both of these concepts will be explored as well as whether or not the use of other costing systems could be appropriate for this company.
Strategies
Super Bakery faced the challenges of breaking into an already mature market that had seen little growth. In order to become a competitive figure, the company had to be strategic in how best to proceed. The first move consisted of targeting school systems. By producing donuts that were USDA approved and tasty as well, annual sales grew.
Secondly, Super Bakery lost the restrictions of producing fresh baked goods by refrigerating and vacuum sealing their products. This allowed the company to grow outside of the local market and ship their products nationally. With such a large customer base, the company wanted to vamp up ways to support and serve the new market. Super Bakery acquired lower pricing for distributors and schools through government-supported commodities, pre-packaged meals for schools thereby reducing distributor’s inventory carrying costs. Lastly, by contracting out major functions of the business, overhead and capital investments were kept at a minimum, (Davis & Darling, 1996).
ABC Costing System
In any organization assigning costs correctly allows management to track profitability and performance. Super Bakery decided to use the ABC costing system for these very reasons. “Through the use of a rational database, Super Bakery’s management is able to examine costs by product, customer, order, broker, territory, department, manufacturer, and common carrier,” (Davis
References: Job order costing system. (2011). Retrieved from http://www.accountingformanagement.com/job_order_costing.htm Davis,T.R.V., & Darling, B.L., “ABC in a Virtual Corporation,” Management Accounting (October, 1996), pp. 18–26.