Essay About Оð Compensation And 1,500Hr Оð

Midwest Office Products
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1.Based on the interviews and data in the case, we calculated the following information.
(1)The cost of processing cartons through the facility:
Personnel expense (warehouse, truck drivers)2,570,000
ÐŽÐ Compensation for truck drivers
( 250,000)
Warehouse personnel expense
$2,020,000
ЎПWarehouse expenses (excluding personnel)
2,000,000
$4,020,000
The cost of entering electronic and manual customer orders:
Order entry expenses
$ 840,000
The cost of shipping cartons on commercial carriers:
Freight
$ 450,000
The cost per hour for desktop deliveries:
Compensation for truck drivers
$250,000
ЎПDelivery truck expenses
200,000
The cost for desktop deliveries
$450,000
ЎТ 6,000 hrs (1,500hr ЎС 4)
ЎТ 6,000
The cost and profitability of the five orders, using the cost driver information and its existing costing system:
The ABC system:
Order
Sales
$610.00
$ 634.00
$6,100.00
$6,340.00
$6,100.00
Cost of goods sold
500.00
500.00
5,000.00
5,000.00
5,000.00
Gross margin
$110.00
$ 134.00
$1,100.00
$1,340.00
$1,100.00
Cost of :
entering electronic order1a
$ 3.50
$ ÐŽÐ
$ 3.50
$ ÐŽÐ
$ ÐŽÐ
entering manual order1b
31.50
31.50
processing cartons2
50.25
50.25
502.50
502.50
502.50
shipping cartons commercially3
60.00
60.00
desktop deliveries
300.00
300.00
interest on A/R balance
25.36
61.00
253.60
244.00
general and selling expenses4
20.00
20.00
200.00
200.00
200.00
subtotal
( 85.85)
(403.49)
(827.00)
(1,287.60)
(1,038.00)
Net income (loss) before tax
$ 24.15
$(269.49)
$ 273.00
$ 52.40
$ 62.00
The existing costing system:
Order
Sales
$610.00
$ 634.00
$6,100.00
$6,340.00
$6,100.00
Cost of goods sold
500.00
500.00
5,000.00
5,000.00
5,000.00
Gross margin
$110.00
$ 134.00
$1,100.00
$1,340.00
$1,100.00
Cost of :
warehousing, order processing, & freight5
$ 80.00
$102.50
$ 800.00
$1,025.00
$ 800.00
general, selling & interest expenses6
24.50
24.50
245.00
245.00
245.00