Many manufacturers are deciding to no longer service small retailers. For ex ample, some companies have policies

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Many manufacturers are deciding to no longer service small retailers. For ex¬ ample, some companies have policies to serve only customers who purchase $10,000 or more of products from the companies annually. The companies de¬ fend such policies on the basis that they allow the companies to better serve their larger outlet, which handle more volume and more diverse product lines.

a. Relate the concepts in the chapter to the decision of manufacturers to drop small customers.

b. Are there any ethical implications of eliminating groups of customers that may be less profitable than others?

c. Does activity-based costing adequately account for all costs that are related to a decision to eliminate a particular customer base? (Hint: Consider op¬ portunity costs such as those related to reputation.)

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Cost Accounting Traditions And Innovations

ISBN: 9780538880473

3rd Edition

Authors: Jesse T. Barfield, Cecily A. Raiborn, Michael R. Kinney

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