Costing Systems
Costing Systems
Introduction
After completing the “Broadening Your Perspective” communication activity in chapter 17 in Accounting: Tools for business decision making, the author was able to determine what strategy Super Bakery, Inc. used to make their business run in a more efficient manner. In this essay, the author discusses why Super Baker’s management felt it necessary to install an activity-based costing (ABC) system. The author shares whether or not he agrees on the reasoning of this decision and a rationale following this is also shared. It is also discussed whether or not a job order costing system or process order costing system would work for Super Bakery, and why.
Strategies implemented by Super Bakery
Super Bakery, Inc was trying to use a strategy that would add maximum value to the company while making minimal investments, which would give the company “the biggest bang for the buck”. Specifically, the strategy the company decided on was to outsource manufacturing, warehousing, selling, and shipping. As a part of this strategy Super Bakery, Inc. was could combine these outsourced companies and organize the workflow (Kimmel, Weygandt, & Kieso, 2009).
Why install the ABC System? Super Bakery’s management decided to implement an ABC system, because the business wanted to create a more accurate tracking system of the costs for each and every order. By using the ABC system the business could improve pricing. Super Bakery, Inc also suspected a wide variation of customers in different parts of the country (Kimmel, Weygandt, & Kieso, 2009). The author agrees that Super Bakery’s reasoning on the ABC system was the best choice. This type of system uses unit cost instead of total cost to show a better view of the costing system. The idea behind this business management decision was to improve the costing methods by using a system that could track the suppliers, distributors, and the costs of the products. Super Bakery needed to use a system that would be
Introduction
After completing the “Broadening Your Perspective” communication activity in chapter 17 in Accounting: Tools for business decision making, the author was able to determine what strategy Super Bakery, Inc. used to make their business run in a more efficient manner. In this essay, the author discusses why Super Baker’s management felt it necessary to install an activity-based costing (ABC) system. The author shares whether or not he agrees on the reasoning of this decision and a rationale following this is also shared. It is also discussed whether or not a job order costing system or process order costing system would work for Super Bakery, and why.
Strategies implemented by Super Bakery
Super Bakery, Inc was trying to use a strategy that would add maximum value to the company while making minimal investments, which would give the company “the biggest bang for the buck”. Specifically, the strategy the company decided on was to outsource manufacturing, warehousing, selling, and shipping. As a part of this strategy Super Bakery, Inc. was could combine these outsourced companies and organize the workflow (Kimmel, Weygandt, & Kieso, 2009).
Why install the ABC System? Super Bakery’s management decided to implement an ABC system, because the business wanted to create a more accurate tracking system of the costs for each and every order. By using the ABC system the business could improve pricing. Super Bakery, Inc also suspected a wide variation of customers in different parts of the country (Kimmel, Weygandt, & Kieso, 2009). The author agrees that Super Bakery’s reasoning on the ABC system was the best choice. This type of system uses unit cost instead of total cost to show a better view of the costing system. The idea behind this business management decision was to improve the costing methods by using a system that could track the suppliers, distributors, and the costs of the products. Super Bakery needed to use a system that would be
References: Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2009). Accounting: Tools for business decision making (3rd ed.). Hoboken, NJ: John Wiley & Sons.