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Berendsen Island, an outsourced workwear service, uses the standard costing model to determine its profitability. Because the company recently reported a loss, the plant manager and the business controller investigate time-driven activity-based costing in an effort to gain insights into its cost structures. The company also needs to provide a quote to two potential new customers.
Students will build a time-driven activity-based costing (TDABC) model, discuss the results, recommend strategies for pricing negotiations and gain a familiarity with activity-based budgeting. The case is divided into three parts: (A) a cost-to-serve module that illustrates how to build a TDABC model; (B) a pricing and negotiations module that demonstrates the usefulness of TDABC and the implications for the company of the entrance of new customers and (C) a module that applies TDABC for budgeting purposes.
Iceland, Large, 2014-2015
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