ACT302 - Allied Office Products: Pricing Decisions & Profitability

This case study delves into the pricing decisions and customer profitability analysis of Allied Office Products, a multinational company operating in the retail supermarket domain. The analysis includes calculating Activity-Based Costing (ABC) based service costs for the Total Forms Control (TFC) business, determining distribution service costs for Customer A and Customer B, and assessing the profitability of these two customers. The study also evaluates the potential implementation of a Single Exit Price (SEP) pricing system and provides managerial advice for Allied regarding the TFC business, emphasizing the importance of costing techniques and fixed production costs. The case study concludes that a uniform pricing strategy is more suitable for Allied Office Products to ensure consistent profitability across all customers.

Table of contents
• Introduction
• Company Overview
• ABC"-based services costs for the TFC
business
• Distribution services costs for "Customer A"
and "Customer B.
• The profitability of these two customers
• TFC implement the SEP pricing system
• Managerial advice do you have for allied
about the Total Forms Control (TFC) business
• Conclusion
• Reference List

Introduction
• The project will consist of the calculation of
the activity based costing that is done by
different organisations.
• This helps the organisations to solve a lot of
problems of finance that occurs in a lot of
organisations.
• These are vital for the business firms to work
properly and execute those plans that are
available for the business firms.

Company Overview
• The company that is selected for the research of
the project is Allied Office Products.
• This is a multinational company that is operated
from the United Kingdom.
• The headquarters of the company is located in
London, United Kingdom.

Company Overview
• There are more than fifty thousand employees
working under the company.
• The company Allied Office Products works
under the domain of retail supermarkets. These
are very important overview that is provided for
the company.
• The company Allied Office Products works
under the domain of retail supermarkets. These
are very important overview that is provided for
the company.

ABC"-based services costs for the TFC business
Rent 1211
Depreciation 177
Utilities 159
Security 3
Total Storage Expenses 1550
Rent 214
Depreciation 31
Utilities 28
Salaries and Fringes 909
Telephone 96
Taxes/ Insurance 104
Travel/ Entertainment 30
Postage 56
Hourly Payroll and fringes 316
Temp Help 17
Total requisition handling expenses 1801
Variable warehouse pay and fringes 1735
Travel and entertainment 10
Total Warehouse Activity 1745
Basic Warehouse Stock Selection 761
Pick-Pack activity 734
Desktop Delivery 250
Data Processing Expenses 612
Total 5903

ABC"-based services costs for the TFC business
• The use of Activity based costing is very
important for the organisation Allied Office
Products.
• This helps the company to work properly and
the calculation is done on the basis of the
activities that are done by the company.
• These are very important ways of calculating
costing that will give proper results for the
company.

ABC"-based services costs for the TFC business
• These are very important for the business firms
to work properly on the different kinds of factors.
• So that these issues are solved by the business
firms that do not cause any kind of problems in
the organisation and as well as for the customers
those who go to buy the products.

Distribution services costs for "Customer A" and
"Customer B.
Activity Based Costing
Particulars Customer A Customer B Total
Administration 4 2 6
Production 6 3 9
Delivery 6 2 8
Indirect cost 16 7 23
Total 32 14