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Activity-Based Costing System

I worked at two places that had to use this system, one was in Michigan and that was a commercial bakery and the other was OReilly Auto Parts. First the bakery had a lot of contracts with companies across the United States, and everything went in to the contract. Each contract was different, one of them was Sysco they would order 125 thousand cases of sweet rolls each month at twenty-six cents a roll and there was thirty-six in each case and that comes out to $117,000 and that was just one order. The cost covered the drivers who took the product and the employees who worked on them and the print shop and the cases to put the product in. Everything that was brought in to the plant was paid for from each contract and the only times we had to renegotiate was when other companies wanted to order products like sweet rolls and needed them right away then we would add another shift and give them some of the product from the Sysco order. They would charge them a higher price to cover the new shift of people and any overtime. Supply and demand, is this a great country?

Working at an auto parts store you get to see just how much there is on a markup. The front room merchandise has a large markup for example an air freshener displays we are charged a penny for each freshener and on most there is fifty on a rack and we charge you $2.99 to$ 7.99 and this is pure profit. Everything that was sold was tracked and when an item hit the range, the price went up and so we had price changes every week. Every 3500 stores had their own system because what sells in one market might not sell in others. Price goes up and companies find a cheaper place to buy products. For over twenty years I saw so much product from all over the world and the quality was bad. This is ABC at its best.