Dakota Office Products

Jun 28th, 2015
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Florida Institute of Technology-Melbourne
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Analyzes the profitability of using an activity based cost system for different companies.

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Dakota Office Products1. Why was Dakotas existing pricing system inadequate for its current operating environment?Dakota's current system is inefficient, as we can see by looking at their loss in 2000. Prices are currently based on prior year expenses and are marked up at a set rate. Prices are independent of services used by customers, outside of desktop deliveries. A more efficient pricing strategy would include activity based costing, which would allow Dakota to analyze profitability of customers, services, and products. There is a significant difference in profits from customers who place several large orders (customer A), in which profits will be high, and those who place many small orders (customer B), in which profits will be much lower.2. Develop an activity-based cost system for Dakota Office Products (DOP) based on Year 2000 data. Calculate the activi

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