Super Bakery Essay

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Running Head: Super Bakery Super Bakery Inc.’s Costing Method January 12, 2013 David Kochevar Super Bakery Inc. Super Bakery is a company that was created by a Franco Harris a former football player who is well known for playing on the Pittsburgh Steelers. Harris wanted to create a supply of baked goods that are healthy and even enriched in proteins as well as minerals and vitamins. Super Bakery has taken an interesting spin on the term virtual corporation. This is a virtual company in which shipping; manufacturing, selling and storage are all outsourced to external businesses. Problems arise however because Super Bakery was still using the old costing system that wasn’t able to keep track of the different costs created from high profit margins and low profit margins. Huge profits and low profits created from orders were not separate. It looked as if it cost the same to fulfill each unique order but this wasn’t always the case. How could this problem be fixed? ABC Method The managers of Super Bakery have decided to add in and use a newer applicable costing method called the ABC method. The ABC or the activity-based costing method can help balance out the distortions from the different orders and their different costs. The ABC costing method is process that uses multiple bases to calculate a more accurate overhead cost. In the modern day business world many companies are outsourcing more and more of their activities and producing more than one main popular product. This new method allows for all of these different variables and costs to be considered for the business instead of focusing on one overhead base. It helps calculate balanced accurate variable and fixed costs for the company. For Super Bakery, using this newer more modern costing method, they can now keep track of all of their outsourced activities such as shipping, manufacturing, storage

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