Allied Stationery Products

Activity Based Costs

Calculation of service Costs
Total FY 92 Service Cost Rate
Value Added Activities Exp ($) Cost Driver Cost Driver Units ($)
Storage
Requisition Handling
Warehouse Activity
Pick Packing
Data Entry
Desk Top Delivery

Total FY 92 expenses are given in Exhibit 3 of the case

Cost driver units are given in the body of the case

Fill in the shaded portion based on information in the case.

Service Costs
Service cost A B
rate ($) Cost Driver Units Cost ($) Cost Driver Units Cost ($)
Storage
Requisition Handling
Warehouse Activity
Pick Packing
Data Entry
Desk Top Delivery
Freight
Inventory Financing 13.50%
Inactive Service Surcharge

Fill in the shaded portion based on information in the case.

Allied Stationary products

1
Customer Profitability Analysis
Customer Profitability Analysis
Customer A Customer B
Old* Under ABC Old* Under ABC
Sales 79,320 79,320 79,320 79,320
Product Cost (50,000) (50,000) (50,000) (50,000)
Service Fees (16,100) (16,100)
Gross Profit 13,220 13,220
Gross Profit % 17% 17%

* Under old system service Fees are allocated based on product cost:
Warehousing and Distribution 20.50%
Inventory Financing 4.70%
Freight 7.00%
Total 32.20%

Fill in the shaded portion based on information in the case.

Allied Stationary products

2