...Case Study Analysis 2 - Midwest Office Products Questions: Based on the interviews and the data in the case, calculate: a) The cost of processing cartons through the facility. The costs that occur through the facility are warehouse expenses (excluding personnel) and facility/warehouse personnel expenses (excluding truck drivers). The total cost of processing cartons through the facility is $4,320,000. It represents a cost per unit of $54/carton ($29 for warehouse personnel expenses and $25 for warehouse expenses). see table exhibit 1 b) The cost of entering electronic and manual customer orders The cost of entering each electronic customer order is $3.00 ($3.50 based on productive hours). The cost of entering each manual order is divided in two parts: entering the basic information on a manual customer order and entering each line item on the order. They respectively take 9 and 4.5 minutes and cost $4.50 and $2.25 ($5.65 and $ 2.63 based on productive hours). Total manual order is $6.75 per order ($7.88 based on productive hours). Productive hours rate will be used for the rest of the assignment. see table exhibit 2 c) The cost of shipping cartons on commercial carriers The cost of shipping cartons on commercial carriers is $450,000.00 per year and $6.00 per carton. see table exhibit 3 d) The cost per hour of desktop deliveries The cost per hour of desktop deliveries is $75.00 (Total Cost $450,000.00 / Total Truck Drivers...
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...Case Study Analysis Midwest Office Products Case Timothy Bower ACC6140 Dr. John Knight Midwest Office Products Case The content of this essay describes the case study analysis of the Midwest Office Products company. With an excellent reputation for customer service and responsiveness, Midwest Office Products is a regional distributor of office supplies to institutions and commercial businesses. The company offers a comprehensive product line ranging from simple writing implements (such as pens, pencils, and markers) and fasteners to specialty paper for modern high- speed copiers and printers. With all the advance technology the company had incorporated in making the company more efficient, John Malone, the general manager was concerned why the company has not shown a profit. Based on the interviews and data provided in the case, estimates will show the costs of processing cartons through the facility, entering electronic and manual customer orders, shipping cartons on commercial carriers, and the cost per hour for desktop deliveries. There will be calculated data for the cost and profitability of five exhibited orders, with a comparison of the costs and profitability to those calculated by Midwest’s existing costing system. The analysis provides a difference explanation for profitability of the five orders by the ABC system and the company’s existing cost system, and what actions John Malone should administer to improve...
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...Questions for Midwest Office Products 1. Based on the interviews and data in the case, estimate: a. The cost of processing cartons through the facility Cost of process $2,320k + 2,000k = $4,320k Practical Capacity 80k cartons Cost rate for supplying capacity $54 per carton b. The cost of entering electronic and manual customer orders Cost of resources performing order entry $840k Capacity of order entry resources 16 x 1.5k hrs 24k hours Cost of order entry process $35 per hour Assign costs based on use of resources Entering a manual customer order 0.150*35 $5.25 / manual order Entering a line item on order 0.075*35 $2.625 / line item Validating an EDI order 0.100*35 $3.50 / EDI order c. The cost of shipping cartons on commercial carriers Cost of resources for commercial shipments $450k Quantity of cartons shipped 75k cartons Shipping costs per carton $6 per carton d. The cost per hour for desktop deliveries Cost of desktop delivery resources $200k +$250k = $450k Number of hours avail for DD 4 * 1,500 = 6k hours Cost rate for DD $75 per hour 2. Using this cost driver information, calculate the cost and profitability of the five orders in Exhibit 2. Compare these costs and profitability to those calculated by Midwest’s existing costing system? 12345Sales610.00$ 634.00$ 6,100.00$ 6,340.00$ 6,100.00$ Cost of items purchased500.00$ 500.00$ 5,000.00$ 5,000.00$ 5,000.00$ Gross margin110.00$ 134.00$ 1,100.00$ 1,340.00$ 1,100.00$ Processing cartons54.00$ 54.00$...
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...9-104-073 REV: APRIL 26, 2005 ROBERT S. KAPLAN Midwest Office Products John Malone, general manager of Midwest Office Products (MOP) was concerned about the financial results for calendar year 2003. Despite a sales increase from the prior year, the company had just suffered the first loss in its history (see summary income statement in Exhibit 1). Midwest Office Products was a regional distributor of office supplies to institutions and commercial businesses. It offered a comprehensive product line ranging from simple writing implements (such as pens, pencils, and markers) and fasteners to specialty paper for modern highspeed copiers and printers. MOP had an excellent reputation for customer service and responsiveness. Warehouse personnel at MOP’s distribution center unloaded truckload shipments of products from manufacturers, and moved the cartons into designated storage locations until customers requested the items. Each day, after customer orders had been received, MOP personnel drove forklift trucks around the warehouse to accumulate the cartons of items and prepare them for shipment. MOP ordered supplies from many different manufacturers. It priced products to its end-use customers by first marking up the purchased product cost by 16% to cover the cost of warehousing, order processing, and freight. Then it added another 6% markup to cover the general, selling, and administrative expenses, plus an allowance for profit. The markups were determined at the start of each...
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...Time-‐driven ABC is not a hypothetical improvement to traditional ABC analysis. The Midwest Office Products processed 80,000 cartons in 2003. Of these, 75,000 cartons were shipped by commercial freight. The remaining 5,000 cartons were shipped under the desktop delivery option. Midwest Office Products identified the following benefits from time-‐driven ABC model. • It could easily update the resource cost of each cost center and departments so that its process costs were accurate and current. • Its cost estimates were more accurate since they were based on actual observations of processing time and actual transaction data, not subjective estimates on where and how people spent their time. • It was easier to increase model accuracy and granularity for high cost and heterogeneous processes. Adding more elements to the time equation enabled managers to easily add more ...
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...| | | | | | | | | | | | | | | | |Midwest Office Products | | | | | | | | | | | | | | | | | ...
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...Midwest Farm Supplies Background: • Began operations in 1931 • Provides farming supplies such as • Steady profits for 70years • Distribution centers: ➢ Ohio ➢ Indiana ➢ Illinois ➢ Iowa Environment: • Competitors: ➢ Competitors are getting more computer literate • Suppliers: ➢ Products sold by Midwest are manufactured by other companies but guided by the designs and specifications provided by Midwest. • Customer: ➢ Prefers face to face dialogue with sales rep due to some limitations by phone conversation. Firm as a system: • The management is organized and communicates well. • The management provides one week classes to sales reps on new fertilizers, waste water recovery, computer assisted farm management techniques. The classes are not designed to make them experts in the subject, rather make them competent to discuss the topics to their customers • Current systems are fine, but a system upgrade might be necessary • John Kubanna - “If it isn’t broken, don’t fix it”. But I just don’t think that’s a good idea when it comes to computer applications Subsystems of the firm: • Human Resource • Marketing • Manufacturing • Financial Services Statement of the Problem: • What type of database suits the need of Midwest Farm Supplies? Areas of Consideration: • Midwest’s management and employees have comprehensive...
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...his office. They discussed her Heartland & Company cost reduction goals for bearing #B02326620. After the meeting Mr. Walsh began wondering if changes should be made to the way suppliers were being evaluated, if price premiums should be paid to suppliers for performing at a higher level and how business should be allocated among suppliers performing at different levels. These were issues needing further consideration. Founded in 1875, Heartland & Company is one of the U.S.’s oldest industrial organizations. It manufactures agricultural and construction equipment as well as commercial and consumer lawn care equipment. Today, Heartland & Company does business in over 100 countries and had sales in excess of U.S. $12 billion in 2007. Bearings2 Bearings are devices that allow constrained relative rotation or linear movement between two parts. The purpose of bearings is to allow motion with a minimum of friction. Friction creates heat and wear of adjoining parts. Bearings are commonly found in furniture drawers, all types of engines and at the intersection of moving mechanical parts. An example of primitive bearings is the use of tree trunks laid down under heavy stones in prehistoric times. Two common types of bearing include roller (cylindrical roller) bearings and ball (spherical roller) bearings. Bearings can range in size from nearly microscopic (watch bearings) to very large (wheel bearings on large earthmovers). Many of Heartland & Company’s products require...
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...“I pledge my honor that I have not violated the Honor Code for this assignment.” Suresh Nistala Midwest Office Products Friday, July 8th, 2016 Managerial Accounting and Analysis Question 1 Based on the interviews and data in the case, estimate: a) The cost of processing cartons through the facility Total number of cartons that can be processed by Midwest in a year are 80,000. 75,000 cartons processed through freight and the rest 5,000 by desktop delivery option. Personnel expenses incurred by Midwest in a year was $ 2,570,000 which included warehouse and truck drivers’ costs. Truck driver expenses per year was $ 250,000. Therefore, the warehouse personnel costs were $ 2,320,000 (2,570,000 – 250,000). The warehouse expenses were $ 2 MM. Warehouse personnel costs/carton = 2,320,000 / 80,000 = 29 Warehouse costs/carton = 2,000,000 / 80,000 = 25. The total costs for processing cartons through the facility was therefore, $54 per carton. b) The cost of entering electronic and manual customer orders The total cost for order entry at Midwest was $ 840,000 which included salaries, fringe benefits, supervision, occupancy and equipment costs to the operators. There were 16 order entry operators. Each operator had a 1750 hours per year of working time and 1500 hours per year of productive work time. Therefore, the total work time was 28,000 hours (1750*16) and a productive time of 24,000 hours (1500*16). For manual entry, the operators needed 0.15...
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...satisfaction and customer loyalty are important in managing relationships with customers, but an excessive focus on improving customer performance with only these metrics can lead to deteriorating financial performance. To balance the pressure to meet and exceed customer expectations, companies should also be measuring the cost to serve each customer and the profits earned, customer by customer. 6-2 Examples of differences between customers who have high and low costs-to-serve may be drawn from the chapter’s Exhibit 6-1, part of which appears below. |High Cost-to-Serve Customers |Low Cost-to-Serve Customers | |Order custom products |Order standard products | |Small order quantities |Large order quantities | |Customized delivery |Standard delivery | |Manual processing; high order error rates |Electronic processing (EDI) with zero defects | |Large amounts of pre-sales support (marketing, technical, and sales |Little to no pre-sales support (standard pricing and | |resources) |ordering) ...
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...Media. “ Through the use of Social Media, customers and prospects now have an almost instantaneous platform for discussion of their ideas, experiences, and knowledge.” Jeff Bullas This will be the key for me to try and change the mind of the Board. Word of mouth is one of the most inexpensive forms of advertising there is, and Social Media platforms allow us to get that rolling with very little cost. The rest of this proposal will consist of the plan that will show us how to accomplish plan the most economical, thorough way. Page 2. The How How will we accomplish such a feet. Well, it starts with presence. We can’t be make a name for ourselves unless we are smack dab in the middle of it. Setting up a regional office in Wrigley will be key, and allows us to keep a finger on the pulse of everything that is going on with our beer. As you can see there are many opportunities surrounding the ballpark for...
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...pricing decisions, compensating employees, and managing costs. Therefore, it is essential that a new cost allocation system must be implemented to better measure the costs and gain insights to guide managerial decisions which can affect the organization’s efficiency. By evaluating Gibson’s current business practices and product lines, the report will identify issues and provide a rationale to utilize a new cost allocation system in order to increase efficiency and profitability. Company Background Gibson Insurance sells two different types of financial products: annuities and life insurance. Annuities are typically financial contracts that offer a re-occurring payment plan. Annuities consist of tax-deferred investments; this means that investors can place their pre-tax dollar income into various financial tools in order to decrease their income. The main goal of tax-deferred investments is to lower an individual’s income for an overall tax savings. Another product is a life insurance in which the policy holders contribute a certain amount of money per year in order to pay a lump sum to any benefactors if the policy holder is deceased. Both of these products are sold by agents who are employed directly by Gibson Insurance. With the vision and mission to pursue a growth strategy for the next several years, the management implemented an acquisition plan. Acquiring other insurance firms would not only increase Gibson’s holdings, but it would also increase customer base. An increased...
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...customer, but more about the product. Satisfaction of the target market is the key but the Four P’s deal with superior product development. The four P’s when developed properly within a marketing strategy will help satisfy the needs of customers in a specific target market and maximize the performance of the organization. In this paper this writer will examine the different parts and how the four P’s are thought out and implemented within a company (2009). In this paper this writer will use Kwik Trip Company as an example. Kwik Trip is one of the top 100 convenience stores with 350 plus stores in the Midwest. There are Kwik Trips all over Minnesota, Wisconsin and Iowa, but will focus on the company as a whole. Marketing is centralized in the corporate location of Lacrosse, WI, but the strategy is geared in the direction of dividing compounds. The primary components of the marketing mix that will be assessed are products. PRODUCT The first of the four P’s is product. This area deals with many issues in the design of the product or physical good that is offered. What is the product or Service? One has to know what the target market wants. What features will one offer on this product? This is concerned with what special features are offered to make it attractive like a television developed with surround sound or an automatic turn off switch. What is the quality level? This question deals with what type of materials will be used to develop this product. How much will the company...
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...incorporated all ten areas of focus and developed them into a legacy of quality and a sustainable competitive advantage. This focus on Operations Managemnt has lead to Ab/ InBev's reputation for quality, and their continued dominance as a global brewery.! Design of Goods! ! The design of goods/services defines a firm, and sets them up for success (or failure) in the market. In order to design a superior product, firms must first understand their customer— what their needs and requirements are. Anheuser-Busch/InBev has focused on developing a diverse portfolio of global brands to satisfy a myriad of customer needs; a few of their more recently-developed beers are actually based on customer suggestions and recipes. The AB/ InBev portfolio ranges from low-cost products such as Busch (which focuses on a costleadership strategy), while domestic brands such as Budweiser and Bud Light are a force to be reckoned with in the North American markets. Other brands such as Hoeegarden and Leffe appeal to craft beer consumers as well as global markets (a differentiation strategy). By customizing products to various consumer tastes, they are able to obtain greater market share worldwide.! ! AB/InBev’s original beer, Budweiser, was developed in the 1800s by the company’s founder, Adolphus Busch set out to create a beer that balanced flavor and refreshment— something that everyone could enjoy. This understanding of customer needs, combined with a commitment to quality and consistency still exist in the...
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...Energy Managed by Midwest Research Institute for the U.S. Department of Energy under contract No. DE-AC36-83CH10093 NREL/TP-570-25885 Report on Biomass Drying Technology Wade A. Amos National Renewable Energy Laboratory National Renewable Energy Laboratory 1617 Cole Boulevard Golden, Colorado 80401-3393 A national laboratory of the U.S. Department of Energy Managed by Midwest Research Institute for the U.S. Department of Energy under contract No. DE-AC36-83CH10093 Prepared under Task No. GT818510 November 1998 NOTICE This report was prepared as an account of work sponsored by an agency of the United States government. Neither the United States government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States government or any agency thereof. Available to DOE and DOE contractors from: Office of Scientific and...
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