Blue Ridge Case - Activity Based Costing (ABC)

1) Profitability Analysis: voluptuous Ridge         Large          forte          minuscular         Total gross revenue         $308,762.00         $183,744.00         $318,024.00         $810,530.00 Manufacturing Costs         $112,552.70         $72,164.09         $162,864.09         $347,580.88 sales and Administration Costs         $78,303.47         $50,790.54         $156,805.99         $285,900.00 Total Costs         $190,856.16         $122,954.63         $319,670.08         $633,480.88 Cost as % Sales         61.81%         66.92%         100.52%         78.16% Profit         $117,905.84         $60,789.37         ($1,646. 08)         $177,049.12 Profit Margin         38.19%         33.08%         -0.52%         21.84% Note: For critical calculations please reference attached document. 2) confine action go for Blue Ridge maked on the analysis: The above customer profitability analysis indicates that the belittled customers have a negative profit margin. As this specialized customer base accounts for 40% of Blue Ridges meat sales volume we urge the following action steps be taken in hostelry to increase their profitability: *          cave in an on line/electronic ordering corpse for customers in order to abstract the high cost associated with entering bribe orders by Blue Ridge employees. shortly this represents 14.56% of total be with 12.23% of total cost allocated to excellent customers. *         Develop an electronic honorarium system for minuscular customers, where payments are wired directly into Blue Ridges brim account befo! re the order is processed and shipped.

Currently recognise checks for small customers represent 1% of total cost. *          turn all over the effects on price increases for small customers. Currently, shipping cost for small customers represent 4.14% of the total costs, increasing the price for small customers could help offset the shipping costs. *         Conduct a cerebrate on small customer orders to help determine if a minimum order requirement can help purloin the costs associated with shipping without sacrificing the high volume. *         Invest in in the buff inking technology in order t o help justify increases in prices. The investment should eliminate their customer complaints and increase their demand. *         Determine the costs associated with investing in a higher quality pass over and align with an appropriate sales strategy. If you want to get a full essay, order it on our website: BestEssayCheap.com

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