Chap 5
Chapter 5
Activity-Based Costing and Customer Profitability Analysis
Cases
|5-1 |Blue Ridge Manufacturing (Activity-Based Costing for Marketing Channels) |
|5-2 |Columbo Soft-Serve Frozen Yogurt: Using Activity Based Costing To Assess Channel/Customer Profitability |
|5-3 |Wilson Electronics (A) |
|5-4 |Wilson Electronics (B) |
|5-5 |The Buckeye National Bank (ABC Costing in the Service Sector) |
|5-6 |Precision Paint |
|5-7 |Forest Hill Paper Company |
| | |
Readings
5-1: “Activity-Based Costing and Predatory Pricing: The Case of the Petroleum Retail Industry” by Thomas L Burton and John B MacArthur, Management Accounting Quarterly, (Spring 2003).
The assignment of indirect costs in a volume-based costing system can lead to product-cost subsidization—overcost high-volume products and undercost low-volume products. Undercosted products can lead to the appearance of predatory pricing where it actually does not exist. This article focuses on a lawsuit brought against a major chain of retail motor fuel (gasoline) service centers for allegedly selling regular-grade gasoline below cost, as defined by state statutes. The defendant employed ABC analysis to support its position that it was not selling its regular gasoline below cost. After the ABC analysis was presented, the case was settled, and the
Activity-Based Costing and Customer Profitability Analysis
Cases
|5-1 |Blue Ridge Manufacturing (Activity-Based Costing for Marketing Channels) |
|5-2 |Columbo Soft-Serve Frozen Yogurt: Using Activity Based Costing To Assess Channel/Customer Profitability |
|5-3 |Wilson Electronics (A) |
|5-4 |Wilson Electronics (B) |
|5-5 |The Buckeye National Bank (ABC Costing in the Service Sector) |
|5-6 |Precision Paint |
|5-7 |Forest Hill Paper Company |
| | |
Readings
5-1: “Activity-Based Costing and Predatory Pricing: The Case of the Petroleum Retail Industry” by Thomas L Burton and John B MacArthur, Management Accounting Quarterly, (Spring 2003).
The assignment of indirect costs in a volume-based costing system can lead to product-cost subsidization—overcost high-volume products and undercost low-volume products. Undercosted products can lead to the appearance of predatory pricing where it actually does not exist. This article focuses on a lawsuit brought against a major chain of retail motor fuel (gasoline) service centers for allegedly selling regular-grade gasoline below cost, as defined by state statutes. The defendant employed ABC analysis to support its position that it was not selling its regular gasoline below cost. After the ABC analysis was presented, the case was settled, and the