Please open this link: Midwest Office Products case study and answer the followi
ID: 2488818 • Letter: P
Question
Please open this link: Midwest Office Products case study and answer the following questions:
1- Based on the interviews and data in the case, estimate:
A- The cost of processing cartons through the facility
B- The cost of entering electronic and manual customer orders
C- The cost of shipping cartons on commercial carriers
D- The cost per hour for desktop deliveries
2- Using this cost driver information, calculate the cost and profitability of the five orders in Exhibit 2. Compare these costs and profitability to those calculated by Midwest’s existing costing system?
3- Explain the difference in profitability of the five orders calculated by the ABC system and the company’s existing cost system.
4- Based on your analysis above, what actions should John Malone take to improve Midwest’s profitability?
5- What issues, barriers, or concerns arise in your organization
Based on your reading of the case identify the main issues of the case and answer the questions in your own words. To better understand the case, you may also research the Internet, journals, and library reference materials and provide an up to data analysis.
Explanation / Answer
1-A
The cost of processing cartoons:
Particulars
Amount in $
Truck driver cost per year (A)
250000
Warehouse personal cost per year (B)
2320000
Personnel cost per year (A + B)
2570000
Warehouse non-personnel cost (C)
2000000
Total number of cartoons per year (N)
80000
Warehouse personnel cost per cartoon {B ÷ N}
29
Warehouse non-personnel cost per cartoon (C ÷ N)
25
Total cost of processing cartoons (29 + 25 =)
54
Particulars
Amount in $
Truck driver cost per year (A)
250000
Warehouse personal cost per year (B)
2320000
Personnel cost per year (A + B)
2570000
Warehouse non-personnel cost (C)
2000000
Total number of cartoons per year (N)
80000
Warehouse personnel cost per cartoon {B ÷ N}
29
Warehouse non-personnel cost per cartoon (C ÷ N)
25
Total cost of processing cartoons (29 + 25 =)
54