Printing sector, which is due to the new technologies coming to the market, that made a change the competitive position of the company. The impact of the external environment ? Problem Identified: ? Lowering of the barriers to entry due to the cheaper technologies implemented in the market ? Advanced technology grinding down the quality-based competitive advantage. ? High competition from large national chains and small stand-alones ?
Price pressures and loss of high margins, i. e. rent Management Accounting The Original Allocation: ?The company faced inaccuracy issues in identifying customer profitability, using of the Activity Based Costing (ABC) ?Calculating “rent” of Assembly Sq.
ft. : We took the total amount of rent and divided it by the total amount of the square feet which is 30000/15000 and then multiplied it by the square feet of the assembly department “cost pool” 4000, which adds up to $8000.
($30,000/15,000 sq. ft. )*4,000= $8,000 ? Calculating “Others” for Assembly Labour hrs. : Using the same method, but using the total amount of the number of labour hours instead of the square feet utilized.
($20,000/2440hrs)*1,280= $10,491. 8 ? In order to maintain a competitive advantage, this report is to review the system they are using and point out what needs to be done to resolve the issues faced