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Essay / Research Paper Abstract
This 4 page paper looks at how a furniture shop ay use activity based costing to calculate costs and determines the most profitable areas of its' business.
Page Count:
4 pages (~225 words per page)
File: TS14_TEabccase.rtf
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Unformatted sample text from the term paper:
for and those which are not creating a profit may be eliminated to maximise the return on resources. If we look at using activity based costing for a furniture store
then we can consider how and why this is advantageous. The furniture shop has a range of costs, they fulfil office contracts where there are processes that include
the purchasing of the furniture, storing and delivering it, fitting it on site and also aspects such as sales. For the shop there is the need to hold a range
of stock, operate the shop with all of the overheads and deliver furniture. For some ranges there is increased advertising and marketing, for others there ,may be the use of
window displays. If the compnay is making sales over the internet this will include the setting up of the servers, the running of the internet site, the costs of selling
though the site with the premium on credit card fees. However, it may also be possible to order some items direct from the manufacturer and send to the purchaser, so
there may be fewer storage costs. There will also be delivery costs. Each different sale may be seen as having different associated costs and activity based costing may identify which
type of furniture sales are the most attractive and any that may be creating liabilities rather than profit. This is an information
system that takes advantage of new technology, the system will identify the activity that has been performed, and then, based on information already programmed into the system, make an allocation.
This allocation can be seen as directly reflecting the consumption of resources and costs of any particular product. This is maintained by specially designed cost drivers, for example the amount
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