You are the General Manager at MarketStore

You received the following email from Holly, the newly appointed CEO:

From: Thomson

To: General Manager

Sent: 30 June 2022

Subject: Implementation of Storage & Store on the Go

Hi GM,

I have been thinking about implementing a new service line Storage & Store on the Go.

Currently, our organization only offers office workstations. The current trend now is to include storage space together with work stations. If work stations are added on with storage, I believe it will be a huge success. Many current competitors have already implemented storage with work stations. I will also like to propose a concierge service and a caf to complement Storage & Store on the Go. The reason is because this will be a value added service and prospective customers will find this service a truly different experience, equivalent to travelling on a first class or business class seats on flights.

However, issues on pricing this new service is the problem now. I have queries on the factors that will affect pricing and whether we should use marginal cost plus approach or full cost plus approach? Recently, a Consultant has proposed the use of ABC.

I will like know the advantages and disadvantages of using ABC as compared to the marginal or full cost plus approach.

Thank you for your assistance

Regards,

Thompson

Required:

You are the Finance Executive, and you are required to reply by email to Holly for her queries on the advantages and disadvantages of ABC to set the costs of the Storage & Store on the Go. You also need to propose to Holly, whether ABC, marginal cost plus approach or the full cost plus approach is more suitable. 1500 words only.