ContinuationNurChapter+5

ContinuationNurChapter+5 - l 2003 Prentice Hall Business...

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Click to edit Master subtitle style 7/8/11 l 2003 Prentice Hall Business Publishing, Cost Systems Analysis Chapter 5 & More
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7/8/11 l 2003 Prentice Hall Business Publishing, Traditional Costing Activity Based Costing Time Driven Activity Based Costing Total Life Cycle Costing Target Costing Keizen Costing
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7/8/11 l 2003 Prentice Hall Business Publishing, Tracing Marketing-Related Costs to Customers The costs of marketing, selling, and distribution expenses have been increasing rapidly in recent years Many of these expenses do not relate to individual products or product lines but are associated with customers served Companies need to understand the cost of selling to and serving their diverse customer base
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7/8/11 l 2003 Prentice Hall Business Publishing, Managing Customer Profitability The opportunities for a company to transform its unprofitable customers into profitable ones is perhaps the most powerful benefit the company’s managers can receive from an activity-based costing system Managers have a full range of actions for transforming unprofitable customers into profitable ones Process improvements Activity-based pricing
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7/8/11 l 2003 Prentice Hall Business Publishing, Process Improvements Managers should first examine their internal operations to see where they can improve their own processes to lower the costs of serving customers If customers are migrating to smaller order sizes: Strive to reduce batch-related costs, such as setup and order handling Electronic systems greatly lower the cost of processing large quantities of small orders If customers prefer suppliers offering high variety Customize products at the latest possible stage Use information technology to enhance the
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7/8/11 l 2003 Prentice Hall Business Publishing, Activity-Based Pricing Pricing is the most powerful tool a company can use to transform unprofitable customers into profitable ones Activity-based pricing establishes a base price for producing and delivering a standard quantity for each standard product Special services may be priced just to cover costs or also to earn a margin
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7/8/11 l 2003 Prentice Hall Business Publishing, Managing Relationships Companies can transform unprofitable customers into profitable ones by persuading the customer to use a greater scope of the company’s products and services If these efforts fail, the company may then contemplate “firing” the customer Some customers may be unprofitable only because it is the start of the relationship with the company
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7/8/11 l 2003 Prentice Hall Business Publishing, Problems Implementing ABC According to Robert Kaplan and Steven Anderson q 50% adoption rate ???? q
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This note was uploaded on 07/08/2011 for the course ACG 4352 taught by Professor Nure. during the Spring '11 term at University of Florida.

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ContinuationNurChapter+5 - l 2003 Prentice Hall Business...

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