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9/16/2012 1 . Why was Dakota’s existing prices system inadequate for its current operating environment? Profit margins different based upon how big is the order, larger orders were more profitable than small instructions. Based upon customer order size, prices must have been different and the expense determination of the DOP must have been assessed as it generated a damage.

2 . Develop an DASAR system pertaining to Dakota based on Year 2000 data. Estimate the activity cost-diver rate for each and every activity in 2000. a. Order Entry i. Purchase Entry Expenses/Order Lines 2. 800, 000/150, 000= $5. 3/line w. Carton Digesting i. (90% of storage place personnel expenditure + Expense of Items)/cartons ii. (. 9*2, 400, 000+35, 000, 000)/80, 000= $464. 5/carton c. DOP my spouse and i. (10% of warehouse personnel expense & delivery pickup truck expense)/ DOPs ii. (. 1*2, 500, 000+200, 000)/2, 000= $220/carton d. Managing i. (warehouse expenses & freight)/ instructions ii. (2, 000, 000+450, 000)/24, 000= $102. 08/order 3. Using your answer to #2, calculate earnings for Customers A and W. CustomerCostAB UnitsCostUnitsCost Order Entry $ your five. 30 60 $ 318. 0 one hundred and eighty $ 954. 00 Ticket Process money 464. 50 200 bucks 92, nine hundred. 00 200 $ 80, 900. 00 DOP $ 220. 00 0 $ , twenty-five $ your five, 500. 00 Handling money 102. eighty 12 dollar 1, 233. 60 90 $ 15, 280. 00 Revenue $ 103, 500. 00 bucks 104, 000. 00 Total Cost dollar 94, 451. 60 dollar 109, 634. 00 Net Profit dollar 8, 548. 40 dollar (5, 634. 00) Success %8. 30%-5. 42% four. What talks about any difference in success between the two customers? The key difference involving the profitability with the two buyers is the ethod of delivery, number, and size of every single of each purchase. 5. Exactly what are the limitations, in the event any, towards the estimates with the profitability with the two consumers? Limitations for the estimates of profitability for anyone two buyers are mainly focused around the not enough information. There might be other concrete or intangible pieces of info which may perform a significant function on these types of estimates. 6. Is there any extra information you want to have to describe the relative profitability from the two clients?

Additional information that might be useful around this estimate might include: -Delivery per labor hour -Wages or volume of personnel -Number of assets (labor) in each activity 7. Assume that Dakota can be applied the examination done in #3 to the entire customer base. How could this sort of information ensure that the Dakota managers increase company profits? Dakota managers ought to revise the desktop delivery pricing to get higher in order to avoid loss. Buyer pricing ought to be revised depending on the number and size of each order.. Suppose that a major customer switched via placing every its instructions manually to placing most its requests over the Internet internet site. How will need to this impact the activity expense driver rates calculated in #2? Just how would the switch have an effect on Dakota’s success? This action will affect two areas, buy entry and process cartons. The cost every order would decrease as less labor is requirement of both finalizing and admittance which will result in improved profitability since two out f the four actions would be decreased.

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