Accounting for Prices

Accounting for Prices.

Theresa (Terri) G. Phillips

ECO / 561

November 6, 2011

Seth Jardine, CPA

Accounting for prices.

This paper reviews Super Bakery, a virtual business and their implementation of an Activity Based Costing system. Super Bakery established a thriving business in an area that was in rapid decline. By using a new business model they could gain business where other bakeries were seeing a decline in sales.

* Strategies

* One of the strategies Super Bakery used to help implement the Activity Based Costing system was tracking jobs. They kept track of the cost of each job along with how well or not the job went. By tracking their jobs they could implement Activity Based Costing with data that had already been collected.

* By maintaining control of customer contact they could keep their relationship with customers. Customer feedback is vital to a virtual organization. The costing and accounting go only so far if the customer is not happy.

* Handling all administrative functions is another area where Super Bakery made it easy to move to an Activity Based Costing system. Their in house administration keeps close relationships with trucking companies and other bakeries. This will minimize important orders missed by an outside vendor.

* Another strategy , “Super Bakery became one of the first companies in the institutional baked goods market to pioneer a form of insurance known as performance bonding. School systems are compensated through the performance bond if their order of Super Bakery donuts is not delivered and they have had to place an equivalent order with another supplier”. (Davis, Darling & Slocum, 1995)

* Super bakery worked hard at their vendor relationship management. To maintain a virtual organization it is crucial to maintain a close, trusting relationship with vendors. The business needs to work through their problems with the vendors to achieve success.

* Activity Based Costing

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