Costing Methods Essay

387 Words2 Pages
Super Bakery, Inc. is a nationwide supplier of minerals, vitamins, protein-enriched doughnuts, and other baked goods to the institutional food markets, mainly school systems. This company was created by Franco Haris, a retired football player, in 1990 (Kimmel, Weygandt, and Kieso, 2009, p.864). The purpose of this essay is to discuss strategies used by management of Super Bakery, Inc., why management found it necessary to install an ABC system, and if a job order costing system or a process order cost system would be effective for Super Bakery, Inc. Strategies Utilized by Super Bakery, Inc Super Bakery, Inc. is a virtual organization where the core and strategic functions are performed inside the organization. All additional functions are outsourced by utilizing a network of external organizations (Kimmel, Weygandt, and Kieso, 2009, p.864). By outsourcing these additional functions, Super Bakery, Inc. has the ability to minimize operation costs and control activities. Utilizing outsourcing allows the reduction of risks that are affiliated with each level of production. Super Bakery, Inc. has eliminated additional expenses that were a result of owning, maintaining, and repairing machinery; employee salaries; utility expenses; and the cost affiliated with storing raw materials and finished goods. Installing an ABC System Super Bakery, Inc. has experienced a sturdy sales growth rate of 20% annually. Although, there is constant growth, this company still struggles with the cost of outsourcing (Kimmel, Weygandt, and Kieso, 2009, p.864). Management found there was a disparity among the cost of serving customers country-wide. Management identified a problem with their existing method and had to create a method that would no longer produce disparities. In utilizing the traditional method, company schedules were manually recorded forcing individual cost and

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