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COST MANAGEMENT AND ACCOUNTING

Group Members : Name Priyank Shah Rounit Shah Shruti Agarwal Tilak Debnath Vishal Agarwal Roll No. 05 20 25 34 43 Mohit Palesha Pulkit Khandelwal 46 47 .

Introduced Electronic Data Interchange(EDI) in 1999 Introduced Desk-top option which delivered packages directly to end users. pen. pencil. even after the above introductions and increase in sales. They have incurred loss for the first time. Deals in high speed copier specialty papers. fasteners.Dakota Office Products  Dakota is the regional distributor of office supplies.     . etc.

Types of Delivery System Delivery System Normal Delivery Electronic Data Interchange Desktop Delivery .

000 18. both ordered 200 cartons each for delivery for finding out the reasons for incurring losses.000 12.000 85.750 5.000 12.000 19.Profitability Report of Two Customers Customer A Sales Cost of Items Purchased Gross Margin Warehousing Distribution & Order Entry Contribution to General & Selling Expenses & Profit 103. .250 • They had chosen two customers.750 6.000 85.250 Customer B 104.

Services Provided to A & B Customer A No. of Manual Orders 200 200 -06 Customer B 200 150 25 100 No. of Cartons Shipped. of Cartons Ordered No. of Line Items Manual No. of Desktop Deliveries No. of EDI Orders Average Accounts Receivable 60 06 9.000 .Commercial Freight No.000 180 -30.

.Activities Involved Shipment Activities Desktop Delivery Order Processing Order processing mainly includes In and Out of Materials and all the processes involved in the warehouse.

Activities in Receiving Orders Activities in Receiving Orders Manual Line Up EDI .

000 20.000 4.00.000 1. Personnel) Freight Delivery Truck Expenses 4.000 (4.70.00.00.00.00.000 Order Entry Expenses General & Selling Expense Interest Expense Net Income Before Taxes 8.25.000 24.000 2.000 20.00.Income Statement Sales Cost of Items Purchased Gross Margin Warehouse Personnel Expense Warehouse Expenses(Excld.000 75.00.000 3.000) .00.50.50.20.

the remaining 10% were assigned to desktop delivery. 90% of the workers involved in order processing.    .000 cartons. 2. Out of these. 75.000 desktop deliveries were made during the year out of 5.000 cartons were shipped by commercial freight.Facts  The distribution center processed 80.000 cartons.

60.40.50.000 = $ 41.000 = $ 4.00.000 20.000 $ 20.60.50.000/ 80.00.Solution Freight Warehouse Rent Warehouse Personnel Expense Delivery Truck Expense $ 4.000 Desktop Delivery Cost Per Carton 4.000 + 2.60.000 $ 2.000/ 2000 = $ 220 Freight Cost Per Carton 4.40.000 $ 24.00.000 = $ 52 2.000 100 % 90 % 10 % 100 % Ship Cartons Process cartons Desktop Delivery $ 4.00.40.00.000/75.000 =$6 .000 Process Cost Per Carton 41.50.000 + 21.

Activity Setup a manual customer order Enter individual order lines in an order Validate an EDI or internet order Total Data EntryOperators Time 2.Facts  Data Entry operators processed 16.000 hours 7.000 hours .000 order lines in total.50.000 EDI orders   1.000 manual orders And validated 8.500 hours 500 hours 10.

000/8.000 Total orders 40.00.Order Entry Expenses EDI/ internet Order 40.000= $10 /Order Manual Customer Order 1.60.50.000= $5 /Order 16.000 5% 8.000 20% Order Entry Expenses 800.60.00.000 .000 Total orders 1.000 Total lines 6.000/1.000/16.50.000= $4 /Order Enter Individual Order Lines 6.000 75% 1.

000) 3000 (2520) .000 19.000 85.03.400 (200x6)1200 -Customer B ($) 1.000 (200x52) 10.000 (200x52) 10.000 85.04.400 (150x6) 900 (25x220) 5500 No of manual orders No of EDI orders Interest on receivables Net Profit Before Tax (6x10)600 (6x5)30 (10% of 9000) 900 5170 (100x10) 1000 -(10% 0f 30.000 18.ABC Analysis Particulars Sales Cost of Items Purchased Gross Margin No of cartons Ordered No of cartons Shipped No of desktop delivered Customer A ($) 1.

it can be concluded that the company is incurring loss mainly due to the Desk-top delivery option. So the company should stop the Desk-top delivery option and concentrate more towards EDI option.  And the EDI option for the consumers is very convenient.Conclusion  After Activity Base Costing Analysis.  .

Thank You .