Super Bakery, Incorporated Costing Methods
Super Bakery, Incorporated Costing Methods
Super Bakery Incorporated (SBI) is a successful virtual corporation focused on supplying donuts and other baked goods to the institutional food market. SBI was founded in 1983 by former Pittsburgh Steelers’ running back Franco Harris. The management has used an outsourcing strategy, whereby, selling, manufacturing, warehousing, and shipping functions have been outsourced to strategic partners. The goal is to extract the maximum value-added from these partnerships while making the minimum investment in permanent staff, fixed assets, and working capital (Davis & Darling, 1996). SBI through outsourcing could control the flow of activities that produce its revenue in the manner it deems most efficient.
Because management believes that the service aspects of the business are strategically more important than the production aspects, they decided to perform some crucial service-related functions in-house, and outsource the other functions, which presented lower risk and variability. It took SBI four years to figure out that its best chance at penetrating the institutional foods market was to target the school system segment of the market. SBI was successful in building a national presence by innovating within its niche; the company vacuum sealed its baked goods, refrigerated them, and distributed nationally through a network of brokers, which had never been done by a competing company. In addition to this, SBI developed strategies of further serving and supporting its client base, such as school systems and distributors. This was accomplished educating the school systems about various government subsidies and implementing a just-in-time delivery system for its distributors.
Activity-Based Costing SBI was using a traditional costing method, which was not very accurate at determining the costs of various customer orders. Production orders out of the California plant cost more than production orders out of the New
Super Bakery Incorporated (SBI) is a successful virtual corporation focused on supplying donuts and other baked goods to the institutional food market. SBI was founded in 1983 by former Pittsburgh Steelers’ running back Franco Harris. The management has used an outsourcing strategy, whereby, selling, manufacturing, warehousing, and shipping functions have been outsourced to strategic partners. The goal is to extract the maximum value-added from these partnerships while making the minimum investment in permanent staff, fixed assets, and working capital (Davis & Darling, 1996). SBI through outsourcing could control the flow of activities that produce its revenue in the manner it deems most efficient.
Because management believes that the service aspects of the business are strategically more important than the production aspects, they decided to perform some crucial service-related functions in-house, and outsource the other functions, which presented lower risk and variability. It took SBI four years to figure out that its best chance at penetrating the institutional foods market was to target the school system segment of the market. SBI was successful in building a national presence by innovating within its niche; the company vacuum sealed its baked goods, refrigerated them, and distributed nationally through a network of brokers, which had never been done by a competing company. In addition to this, SBI developed strategies of further serving and supporting its client base, such as school systems and distributors. This was accomplished educating the school systems about various government subsidies and implementing a just-in-time delivery system for its distributors.
Activity-Based Costing SBI was using a traditional costing method, which was not very accurate at determining the costs of various customer orders. Production orders out of the California plant cost more than production orders out of the New