Advise adam on what decision he should take

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Reference no: EM132521654 , Length: word count:1200

Part A:
Adam Smith, the owner of Button My Ltd, has explored the possibility of finding a cheaper supplier la the raw material required for the production of the Serta and the Tempo beds. He has an offer from a supplier which will reduce his raw material cost significantly and therefore lead to higher profits. There have been some reports that the material under consideration is of a poorer quality and has led to some minor accidents when sleeping the beds. The supplier has pointed out that these accidents have been fairly minor and the cost of refunding the clients and giving them some compensation for their injuries will still be cheaper overall to Adam and therefore result in higher profitability for Button Pty Ltd.

Advise Adam on what decision he should take with regards to the supplier and raw material. Support your answer with any cases or guidelines you consider relevant

(500-600 words)

Part B:

You are required to prepare a proposal on the potential benefits and costs of implementing an Activity Based Costing (ABC) system to determine customer profitability for a grocery wholesaler, Santana Corporation. The company currently use a conventional costing system. The clients of Santana Corporation vary in size and therefore the smaller supermarket operators will tend to place many smaller orders. whereas the larger supermarkets will place larger orders but less often.

Required:
1. Advise Santana Corporation on suggested activities and activity drivers. explaining to management why you consider these appropriate.

2. Using at least two academic research articles to support your background research. advise the management of Santana Corporation on the potential benefits and costs associated with implementing an Activity Based Costing system. (700-800 words)

Reference no: EM132521654

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