Caso Dakota

Dakota case

Question 1

existing price system

1. product cost

2. markup 1 15% product cost warehousing, distribution and freight

3. markup 2* x general and selling expenses + profit

*determined at the start of each year, based on actual expenses in prior year and general industry and competitive trends

For the desktop service, there is an additional markup of 2%.

The existing price system is too vague and inaccurate, for example:

• The price system makes no difference between the manual orders and the EDI/internet-orders, although processing the EDI/internet-orders requires less time so less money.

• The system makes no difference between one big order and several small orders. Several small orders require more data entry operators time. This can be solved by adding extra costs per order, for example administration costs.

Actually, there is no traditional or ABC costing system visible. Now, the question is which system would be the......

1. Why was Dakota’s existing pricing system inadequate for its current operating environment?

- profits only when clients placed large orders for cartons

- real drop of profit if many clients place small orders

- wrong cost determination for individual customers

- wrong cost determination for new services provided by DOP (to small charges for the “desktop” delivery, then the actual cost of it)

2. Develop an activity-base cost system for Dakota Office Products based on Year 200 data. Calculate the activity cost-driver rate for each DOP activity in 2000.

Activity cost-driver rates:

Activity One: process cartons in and out of the facility

Rate=(90% of Warehouse Personnel Expense + Cost o Items Purchased)/cartons processed

Rate=(90%*2,400,000+35,000,000)/80,000=464.5 $/per carton

Activity Two: the new desktop delivery service

Rate=(10% of Warehouse Personnel Expense + Delivery Truck Expenses)/desktop deliveries......

Abstract

The case GMO: The Value versus Growth Dilemma describes Dick Mayo’s puzzlement by the New Economy’s continuous bias toward growth-investment strategies. As one of the most celebrated value investors in the United States, he examines the basics of his philosophy versus that of a growth orientation by evaluating long-term expected returns of several value and growth stocks.

The following paper was examined to pursue several objectives: (1) to define value and growth investing – where the differences lie and whether one approach is superior to the other or whether both have merit; (2) to perform basic valuations of Cisco Systems (a growth company), CVS, R.R. Donnelly and Manor Care (value companies) and to compute their long-term expected returns; and (3) to discuss issues concerning the consistency of GMO’s investment philosophy even when the market seems to run counter to it for a prolonged period of time. In this respect we will also consider the issue if value......

The senior management team of Dakota, an office products distributor, is concerned about the company's first loss in history. Explores the role for activity based costing and customer profitability measurement in a distribution company. Dakota's customers are increasingly demanding more specialized services, such as desktop delivery. Also, whereas some customers have switched to electronic ordering, others continue to place their orders manually. Pricing is based on a fixed markup of the cost of the purchased item. The managers feel that the fixed markup may not be compensating them for the higher costs of manual order processing and desktop delivery. The financial manager initiates an effort to estimate the costs of handling the different types of orders so that she can estimate the profitability of individual customers based on their actual order pattern.

Dakota Office Products

The Main Learning Outcomes from Analysis of the Case

Base on the analysis and investigation of the General Manager’s controller, and directors of operations, , the problem of the organization focuses on its relationship or connection

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