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Bus 630 Managerial Accounting Week 5

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Bus 630 Managerial Accounting Week 5
Assignment 5 Week 5
BUS630
Managerial Accounting
Fedex Strategy is stated as, FedEx Services provides a convenient
single point of access for many customer support functions, such as
marketing, sales and automation”(Fedex, 2005).
Form 10-K which states, We are pursuing a number of initiatives to
continue to enhance the FedEx customer experience, including
improving the capabilities of our sales professionals. For instance,
through our FedEx OneCall program, we assign a single customer
service agent to handle virtually all issues of a customer’s
account”(Fedex, 2005). Examples of operational excellence by Fedex in
the article they state, “FedEx Express invented express distribution in
1973 and remains the industry leader, providing rapid, reliable, time-
definite delivery of packages, documents and freight to more than 220
countries and territories. FedEx Express offers time-certain delivery
within one to three business days, serving markets that generate more
than 90% of the world’s gross domestic product through door-to-door,
customs-cleared service, with a money-back guarantee. FedEx
Express’s unmatched air route authorities and extensive transportation
infrastructure, combined with its leading-edge information technologies,
make it the world’s largest express transportation company (Fedex,
2005).
Evidence of product leadership customer value proposition is stated in
FedEx
statement that, “We believe that seamless information integration is
critical to obtain
business synergies from multiple operating units. For example, our Web
site,
fedex.com, provides a single point of contact for our customers to
access FedEx

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Express, FedEx Ground and FedEx Freight shipment tracking, customer
service and invoicing information and FedEx Kinko office and print
services(FedEx, 2005)”.
What are FedEx's four main business segments? Provide two examples
of
traceable fixed costs for each of FedEx\u2019s four business segments.
Provide two
examples of common costs that are not traceable to the four business
segments.
FedEx's four main business segments are FedEx Express, FedEx
Ground, FedEx
Freight and FedEx Kinko's(FedEx, 2005). A traceable fixed cost of a
segment only exists because of the existence of the segment itself.
One traceable fixed cost for FedEx Express would include the cost to for
fuel, as stated in the document, FedEx Express has a dynamic fuel
surcharge for all U.S. domestic and U.S. outbound shipments and for
shipments originating internationally, where legally and contractually
possible. The surcharge percentage is subject to monthly adjustment
based on the spot price for jet fuel. For example, the fuel surcharge for
June 2005 was based on the spot price for jet fuel published for April
2005. Changes to the FedEx Express fuel surcharge, when calculated
according to the spot price for jet fuel and FedEx Express trigger points,
are applied effective from the first Monday of the month. These trigger
points may change from time to time, but information on the fuel
surcharge for each month is available at fedex.com approximately two
weeks before the surcharge is applicable” (FedEx, 2005). Another
example of traceable fixed cost for FedEx Express would be the cost
involved in owning 557 airplanes(Fedex, 2005).
Traceable costs for FedEx Ground would include the cost to operate
their offices and the 28 hub facilities are strategically located to cover the
geographic area served by FedEx Ground(Fedex, 2005) and FedEx
Ground’s corporate offices and information and data centers are located
in the Pittsburgh, Pennsylvania (FedEx, 2005).

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FedEx Freight’s traceable costs would be the two office locations as
stated in the document, “FedEx Freight’s corporate headquarters are
located in Memphis, Tennessee. FedEx Freight also has administrative
offices located in Harrison, Arkansas and San Jose, California(FedEx,
2005).
FedEx Kinko’s would have traceable costs that include the
cost of operating their 1,290 Office and Print Center as well as the salary
of Gary M.
Kusin who is the President and Chief Executive Officer of FedEx Kinko’s
(FedEx, 2005).
One example of common costs not traceable to the four business
segments would
include dealings with A Joe Gibbs Racing car in the NASCAR NEXTEL
Cup Series FedEx sponsors and the salary of the previous CEO
Frederick W. Smith.
One example of common costs not traceable to the four business
segments would be funds toward
A Joe Gibbs Racing car in the NASCAR NEXTEL Cup Series and the
salary of Frederick W. Smith who is the CEO of FedEx (Fedex, 2005).
3) Identify one example of a cost center, a profit center, and an
investment
center for FedEx.
|Dollar values in millions) |FedEx Express |FedEx Ground |FedEx Freight
|Fedex Kinkos |
|Sales |$19,485.00 |$4,680.00 |$3,217.00 |$2,066.00 |
|Operating Income |1,414 |$604 |$354 |$100 |
| | | | | |
|Segment Assets |13,130 |$2,776.00 |$2,047.00 |$2,987.00 |
|2005 | | | | |

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