Operating Costs

Freight

Warehouse Rent & Depreciation

Warehouse Distribution Personnel

Delivery Truck Expenses

Order Entry Expenses

100%

100%

(90%)

(10%) (100%)

(20%)

75%

5%

Ship Cartons

Process Cartons

Deliver to Desktop

Process Manual Custom order

Enter Items Ordered (Manual)

Orders

Process EDI order

ACTIVITY COST POOL Process Cartons 1. 2. 3. 4. 5. WAREHOUSE PERSONNEL EXPENSES WAREHOUSE EXPENSES FREIGHT EXPENSES DELIVERY TRUCK EXPENSES ORDER ENTRY EXPENSES COST 90% 100% 100% Commercial Freight

ACTIVITY COST POOL Process Cartons 1. 2. 3. 4. 5. WAREHOUSE PERSONNEL EXPENSES WAREHOUSE EXPENSES FREIGHT EXPENSES DELIVERY TRUCK EXPENSES ORDER ENTRY EXPENSES COST 2,160,000 2,000,000 450,000 Commercial Freight

4,160,000

450,000

ACTIVITY COST POOL - Persentase Deliver Desktop 10% Process Manual Enter Items Ordered (Manual) Process EDI Total 100% 100% 100% 100% 100%

100% 20% ACTIVITY COST POOL - Persentase Deliver Desktop 240,000 Process Manual Enter Items Ordered (Manual) Process EDI Total 75% 5%

200,000 440,000 160,000 160,000 600,000 600,000 40,000 40,000

2,400,000 2,000,000 450,000 200,000 800,000 5,850,000

35000000 Amount

Process Cartons

A. PURCHASED EXPENSES 1. WAREHOUSE PERSONNEL EXPENSES Cost warehouse personnel expenses 2. WAREHOUSE EXPENSES Cost warehouse expenses 3. FREIGHT EXPENSES Cost of Freight 4. DELIVERY TRUCK EXPENSES Cost of Delivery truck 5. ORDER ENTRY EXPENSES COST Cost order Entry Expenses TOTAL Cost Driver Unit Per Unit Cost of Items Purchased

2,400,000 2,000,000 450,000 200,000 800,000

2,160,000 2,000,000

4,160,000 Volume of Carton 80,000 52.00 $/carton

Cost Pool Commercial Freight Deliver Desktop Process Manual Enter Items Ordered (Manual) Process EDI

240,000

450,000 200,000 160,000 600,000 40,000 450,000 440,000 160,000 600,000 40,000 Volume of Carton number of Delivery number of order number of line number of order 75,000 2,000 16,000 150,000 8,000 6.00 220.00 10.00 4.00 5.00 $/carton $/delivery $/manual order $/line $/EDI order

Operating Costs 5,850,000 Warehouse Distribution Personnel 2,400,000 (90%)

Freight 450,000 100%

Warehouse Rent & Depreciation 2,000,000 100%

Delivery Truck Expenses 200,000 (20%)

Order Entry Expenses 800,000 75% 5%

(10%) (100%)

Ship Cartons 450,000 $ 6/carton

Process Cartons 4,160,000 $52/carton

Deliver to Desktop 440,000 $220/delivery

Process Manual Custom order 160,000 $10/manual order

Enter Items Ordered (Manual) 600,000 $4/line

Orders

Process EDI order 40,000 $5/EDI

Activity Shipped Carton by Commercial Freight Shipped Carton by Desktop Deliveries Number of Desktop Delivery Manual Orders Setup a manual customer order Enter Individual order lines in an order Number of order lines Validate an ED/Internet order Total

Data Entry Operators Time

Processed

9,500 hours 2,000 hours 7,500 hours 500 hours 10,000 hours

16,000 orders

150,000 lines 8,000 orders 24,000 orders

Dakota Office Products: Income Statement CY2000 Sales Cost of Items Purchased Gross Margin Warehouse Personnel Expense Warehouse Expenses (Excluding Personnel) Freight Delivery Truck Expenses Order Entry Expenses General and selling expenses Interest Expenses Net Income Before Taxes Customer Profitability (Current Methode) customer A Sales Cost of Items Purchased Gross Margin Warehouse, Distribution and order entry Contribution to general and selling expenses and profit Services Provided in year 2000 to customers A dan B customer A Number of cartons ordered Number of cartons shipped commercial freight Number of desktop deliveries 200 200 103,000 85,000 18,000 12,750 5,250 121.2% 100.0% 21.2% 15.0% 6.2% 42,500,000 35,000,000 7,500,000 2,400,000 2,000,000 450,000 200,000 800,000 2,000,000 120,000 (470,000) 121.4% 100.0% 21.4% 6.9% 5.7% 1.3% 0.6% 2.3% 5.7% 0.3% -1.3%

customer B

customer B

Number of orders, manual Number of line items, manual Number of EDI orders Average Accounts Receivable

6 60 6 9,000

Delivery 75,000 cartons 5,000 cartons 2,000 delivery

80,000 cartons

customer B 104,000 85,000 19,000 12,750 6,250 122.4% 100.0% 22.4% 15.0% 7.4%

customer B 200 150 25

100 180 30,000

Volume of Carton Sales Cost of Items Purchased

80,000 cartons 42,500,000 Sales 35,000,000 Cost of Items Purchased Gross Margin Cost Distribution ABC Process Cartons Commercial Freight Deliver Desktop Process Manual General and selling expenses Interest Expenses

Gross Margin 7,500,000 Cost Distribution Existing Warehouse Personnel Expense 2,400,000 Warehouse Expenses (Excluding Personnel) 2,000,000 Freight 450,000 Delivery Truck Expenses 200,000 General and selling expenses 2,000,000 Interest Expenses 120,000 Net Income Before Taxes

(470,000) Net Income Before Taxes

Volume of Orders Sales Cost of Items Purchased

24,000 orders 42,500,000 Sales 35,000,000 Cost of Items Purchased

Gross Margin 7,500,000 Gross Margin Cost Distribution Existing Cost Distribution ABC Warehouse Personnel Expense 2,160,000 Warehouse Personnel Expense Warehouse Expenses (Excluding Personnel) 2,000,000 Warehouse Expenses (Excluding Personnel) Order Entry Expenses 800,000 Process Manual Enter Items Ordered (Manual) Process EDI General and selling expenses 2,000,000 General and selling expenses Interest Expenses 120,000 Interest Expenses Net Income Before Taxes (230,000) Net Income Before Taxes

Cost Per Unit $/carton 530.59 437.50 93.75 52.00 6.00 220.00 10.00 25.00 1.50 (5.88)

Commercial Freight 75,000 cartons cost per unit 39,794,007 32,812,500 6,981,507 3,900,000 450,000 1,875,000 112,500 644,007 530.59 437.50 93.09 52.00 6.00 25.00 1.50 8.59

Desktop Option 5,000 cartons cost per unit 2% 2,705,993 2,187,500 518,493 375,000 125,000 200,000 125,000 7,500 (314,007) 541.20 437.50 103.70 75.00 25.00 40.00 25.00 1.50 (62.80)

Cost Per Unit $/orders 1,770.83 1,458.33 312.50 90.00 83.33 10.00 4.00 5.00 83.33 5.00 (2.88)

Manual Orders 16,000 orders cost per unit 150,000 lines 28,333,333 23,333,333 5,000,000 1,440,000 1,333,333 160,000 600,000 1,333,333 375,000 (241,667) 377.78 311.11 66.67 19.20 17.78 2.13

EDI Orders 8,000 orders cost per unit 2% 14,166,667 11,666,667 2,500,000 720,000 666,667 25,000 25,000 1,063,333 2,833.33 2,333.33 500.00 144.00 133.33 -

17.78 5.00 (3.22)

5.00 212.67

75,000 5,000 100

530.59 530.59 530.59 42,500,000

Customer Profitability (Current Methode)

Rate Sales Cost of Items Purchased Gross Margin Operating Cost Number of cartons ordered Number of cartons shipped commercial freight Number of desktop deliveries Number of orders, manual Number of line items, manual Number of EDI orders Interest on Accounts Receivable Warehouse, Distribution and order entry Contribution to general and selling expenses and profit

Unit

52.00 6.00 220.00 10.00 4.00 5.00 0.10

$/carton $/carton $/delivery $/manual order $/line $/EDI order

Rate Sales Cost of Items Purchased Gross Margin Operating Cost Number of cartons ordered Number of cartons shipped commercial freight Number of desktop deliveries Number of orders, manual Number of line items, manual Number of EDI orders Interest on Accounts Receivable Warehouse, Distribution and order entry Contribution to general and selling expenses and profit

Unit

52.00 6.00 220.00 10.00 4.00 5.00 0.10

$/carton $/carton $/delivery $/manual order $/line $/EDI order

customer A Number of Activity Cost Current Methode 103,000 85,000 18,000 200 200 6 60 6 9,000 12,750 5,250 % tase Cost - ABC current % tase ABC Costing methode Costing 103,000 85,000 18,000 10,400 1,200 60 240 30 900 12,830 5,170 121.18% 100.00% 21.18% 121.18% 100.00% 21.18%

15.00% 6.18%

15.09% 6.08%

Number of Activity

customer B Cost % tase Current Cost - ABC current % tase ABC Methode Costing methode Costing 104,000 104,000 122.35% 122.35% 85,000 85,000 100.00% 100.00% 19,000 19,000 22.35% 22.35% 10,400 900 5,500 1,000 720 3,000 21,520 (2,520)

200 150 25 100 180 30,000 12,750 6,250

15.00% 7.35%

25.32% -2.96%

Activity Cost Pool Ship Cartons Process Cartons Desktop Delivery Process Manual Custom Order Enter Items Ordered (Manual) Process EDI Order

Activity Measure Jumlah Karton yang dikirim commercial freight Jumlah Karton yang diorder Jumlah Pengiriman model Desktop Jumlah order Manual Jumlah line items manual Jumlah order EDI