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Harvard Dakota Case Essay

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Below is an essay on "Harvard Dakota Case" from Anti Essays, your source for research papers, essays, and term paper examples.

Dan Prete and Todd Strupek
Dakota Case

  1. Why was Dakota’s existing pricing system inadequate for its current operating environment? The pricing system was inadequate because it only saw profits on large orders. There was a real drop in profits if there was a bunch of smaller orders by clients. There was also bad costing in terms of individual customers and also for the new services provided.

  2. Activity Cost driver rates:

  * Process cartons in and out of facility
      * Rate = (90% of Warehouse personnel expense + Cost of items Purchased) / cartons processed
      * Rate = (90%*2,400,000+35,000,000)/80,000 = $464.50 per carton
  * New desktop delivery
      * Rate = (10% of Warehouse Personnel expense + Delivery Truck expenses)/ desktop deliveries
      * Rate = (10%*2,400,000 + 200,000)/2,000 = 220 per carton
  * Handling orders
      * Rate = (Warehouse expenses + freight)/ # of orders
      * Rate = (2,000,000+450,000)/(16,000+8,000) = 102.08 per order
  * Data entry
      * Rate = Order entry expenses/order lines
      * Rate = 800,000/150,000 = 5.3 orders per line

  3. - Activity One:
      a. Customer A= 464.5*200 = 92,900
      b. Customer B= 464.5*200 = 92,900
  * Activity Two:
      * Customer A= 220*0 = 0
      * Customer B= 220*25 = 5,500
  * Activity Three:
      * Customer A= 102.08*12 = 1,224.96
      * Customer B= 102.08*100= 10,208
  * Activity Four:
      * Customer A= 5.3*60 = 318
      * Customer B = 5.3*180 = 954
  * Total Overhead:
      * Customer A=94,442.96
      * Customer B=109,562
  * Profitability:
      * Customer A = 103,000 – 94,442.96 – 5300 = 3257.04
      * Customer B = 104,000 – 109,562 – 5300 = (10,862)

  4. The difference in profitability comes from customer A only having to deal with 12 orders while B had 100 orders which was a huge difference in money. Customer B chose a more expensive delivery method which ultimately made them lose money.
  5. The limitations...

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"Harvard Dakota Case". Anti Essays. 10 Dec. 2018

<http://snehaedu.com/free-essays/Harvard-Dakota-Case-546274.html>

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Harvard Dakota Case. Anti Essays. Retrieved December 10, 2018, from the World Wide Web: http://snehaedu.com/free-essays/Harvard-Dakota-Case-546274.html