Business
Business
What is Kanthals president, Ridderstrale, trying to accomplish?
To develop an Account Management System was to find a process of determining the profitability of individual customer orders.
An accurate account measurement system was needed in order to achieve a strategy for increasing growth and profitability without adding a significant amount of sales and administrative resources to handle anticipated increased sales.
In order to carry out this strategy, a system was needed to allocate overhead expenses to the different categories of customers as well as products
It was important that effort was taken to ensure that variable selling, general, and administrative (SG & A) costs did not increase faster than sales revenue
Why does he believe the previous cost system is inadequate for his purposes?
All overhead expenses attributed to SM&A were pooled together and allocated based on volume-based drive, sales revenue.
Under old system is was assumed that all customer orders placed the same demand on the resources of Kanthal
Customers differed by:
Level of technical and commercial service they required which placed fewer demands on Kanthals resources would be overcosted