288 words - 2 pages

There are so many different ways to approach this, it almost becomes an art. If there was a button that could easily and accurately give us the portion of overhead to associate to each cost pool this process would be much easier. The nature of ABC model is to allow different approaches; time model equations are always different. There are different ways to solve for the same cost driver. The best way to be accurate is to ...view middle of the document...

Now if with commercial deliveries, if the cost was driven by expedites or overnight orders then ideally we would account for those. The further detail we try and obtain the more complex our overall method becomes. To combat these complexities and still seek detail we can lean on technological developments in software that can aid in these efforts. Overall, this case left out a lot of details such as total number of orders and better detail on acquisition cost. We could have obtained more accuracy if we had more details around current expenses and orders. For a simple company such as a paper distributor, I would have not anticipated such complexity in calculating cost. This assignment took a long time, but I have a much deeper appreciation for calculating accurate cost. Order entry personnel spend a disproportionate amount of time with manual orders which is driving up cost. Customers that are not utilizing EDI should pay at least $90 more per order. Financing customers for A/R is costing his company money every month, and he might consider charging these customers more as well

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