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This includes all activities that impact information

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Unformatted text preview: Customer Relationship Management: §༊ Is the art and science of strategically positioning customers to improve the profitability of the organization and enhance its relationships with its customer base §༊ Is not a new concept used by service industries §༊ Has not been widely used in the business- to- business environment until lately §༊ Customer action affects firm’s cost • How customers order • How much customers order • What customers order • When customers order an order M༄ Step 1 – Segment the customer base by profitability M༄ Step 2 – Identify the product/service package for each customer segment M༄ Step 3 – Develop and execute the best processes M༄ Step 4 – Measure performance and continuously improve Table 8.1 – Hypothetical Product/Service Offerings M༄ Activity- Based Costing §༊ ABC measures the cost and performance of activities, resources, and cost objects. Resources are assigned to activities, then activities are assigned to cost objects based on their use §༊ Traditional cost accounting is well suited to situations where an output and an allocation process are highly correlated §༊ Traditional cost accounting is not very effective in situations where the output it not correlated with the allocation base Chapter 8 – Order Management and Customer Service Summary: S༅ S༅ S༅ S༅ S༅ S༅ Table 8.2 – Traditional vs. Activity Based Costing M༄ Traditional Accounting §༊ Resources • Department Cost Center o Allocation Basis §༊ Product §༊ Accounting Cost <> Actual Cost §༊ Cost pools mirror organization chart §༊ Sometimes little correlation between allocation bases and consumption §༊ Some costs driven to incorrect level M༄ Activity- Based Costing §༊ Resources • Activities o Cost Drivers §༊ Products, Customers, Markets, Business §༊ Accounting Cost = Actual Cost §༊ Cross- functional...
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