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Costing Methods Essay

749 words - 3 pages

Costing Methods Paper
Erica Rice
ACC/561
18 February 2013
Edward Hastings

Costing Methods Paper
What strategies did the management of Super Bakery, Inc. use?
Super Bakery’s challenges are to control cost by reducing the overhead for serving their customers in different parts of the country, and by doing this they can use the ABC method; Activity-Based Costing System to enhance control over overhead costs and under ABC, the company can trace many overhead costs directly to activities by allowing some indirect costs to be identified as direct costs like the customer’s order cost for every individual customer that seems to be the same amount. The managers can become more aware of their ...view middle of the document...

It has helped to improve operations and to gather a more accurate data for decision making throughout the company. ABC will also improve the performance of the staff to reduce their use of activities in order to improve their individual performance and to be aware of their cost to the company.
Would a job order cost system or a process order system work for Super Bakery?
The job order cost system would only work for Super Bakery if they were looking at a different angle for the company like expanding it to have outlet stores in the various countries that the bakery sell to. With this system they then would need to calculate how the profit was earned on individual jobs, and to help the managers decided if the new adventure is profitable for the company. Another reason why the job order system would not be used for Super Bakery is because with this system (Advantages & Disadvantages by Ingram & Media), this system would require the company to track all material and working in a bakery factory it would be hard to track the loss of flour, sugar and wheat.
The process order cost system would help the managers at Super Bakery to stay informed on the production data of each individual department. This is good because it is appropriate for manufacturing companies like the...

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