Homework answers / question archive / Complete the following: Why was Dakota's existing pricing system inadequate for its current operating environment? Develop an activity-based cost system for Dakota Office Products (DOP) based on the year 2000 data

Complete the following: Why was Dakota's existing pricing system inadequate for its current operating environment? Develop an activity-based cost system for Dakota Office Products (DOP) based on the year 2000 data

Finance

Share With

Complete the following:

1. Why was Dakota's existing pricing system inadequate for its current operating environment?
2. Develop an activity-based cost system for Dakota Office Products (DOP) based on the year 2000 data. Calculate the activity cost-driver rate for each DOP activity in 2000.
3. Using your answer to Question 2, calculate the profitability of Customer A and Customer B.
4. What explains any difference in profitability between the two customers?
5. What are the limitations, if any, to the estimates of the profitability of the two customers?
6. Is there any additional information you would like to have to explain the relative profitability of the two customers?
7. Assume that Dakota applies the analysis done in Question 3 to its entire customer base. How could such information help Dakota managers increase company profits?
8. Suppose that a major customer switched from manually placing all its orders to placing all its orders over the internet site. How should this affect the activity cost-driver rates calculated in Question 2? How would the switch affect Dakota's profitability?

The analyses should be no more than 2–4 double-spaced pages with 12-inch Times New Roman font and one-inch margins (top, sides, and bottom). Appendices (which do not count in the page maximum) may be attached with computations and other supplementary information.