Super Bakery Analysis

Topics: Cost, Manufacturing, Costs Pages: 3 (731 words) Published: April 29, 2012
Super Bakery Analysis
The Super Bakery utilizes a business model that permits lower expenses of labor, equipment, factories, administrative spaces, structures, etc. This model is defined as a “virtual corporation minimizes investment in human resources, fixed assets, and working capital” (Kimmel, 2009, p. 910). This method obviously keeps costs down to the company itself as major operating, and manufacturing expenses are outsourced. Super Bakery adopted the Activity Based Accounting (ABC) to simplify their cost accounting method. The ABC method benefit companies that assign costs based on cost drivers and how they reflect the depletion of the resources to create the product. Complications with Current Accounting System

Super Bakery uses the ABC accounting system that is a management tool that focuses on reducing costs and improving process by using the information obtained from this form of accounting. This allows managers to take the approach of practicing activity based management. This method ,however, is not the preferred method for a company running a virtual corporation simply because at the cost of goods sold will fluctuate depending on variables related to the outsourced and subcontracted companies and how the economy impacts their individual business. By averaging the cost of each good made and shipped to all parts of the globe Super Bakery relies on the least expensive products to make up for the more expensive ones and diminishes the amount of net income that can be produced. Job Order Cost System

The job order cost system will benefit the Super Bakery company more effectively than the ABC system solely because the job order cost system assigns prices to unique products, and also can be assigned to unique shipping locations. This process keeps track of the material, labor, and overhead costs of the individual job. Assigning different values to the fluctuating variables of shipping methods, contractors, and outsourced companies the Super Bakery...

References: Kimmel, P. D. (2009). Accounting: Tools for Business Decision Making (3rd ed.). Retrieved from The University of Phoenix eBook Collection database.
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