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  • March 2004 (Revised April 2005)
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Midwest Office Products

By: Robert S. Kaplan
  • Format:Print
  • | Pages:4
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Abstract

Presents an easy introduction to time-driven activity-based costing (ABC) that allows students to build a simple ABC model of order profitability. Midwest's time-driven ABC approach is based on two categories of parameter estimates. The first is the cost per hour of employees performing diverse tasks, such as order-entry operators and delivery personnel performing desktop deliveries. The second is the estimated time required for employees to perform each type of task (manual vs. electronic orders, nearby vs. distant deliveries). Students apply the time-driven ABC model to five representative orders to estimate order profitability based on a far more accurate portrayal of the cost of processing and delivering orders. Stimulates a discussion about the actions, such as pricing and process improvements, to enhance the profitability of orders and also how to report and manage the cost of unused capacity. A rewritten version of an earlier case.

Keywords

Cost; Price; Activity Based Costing and Management; Time Management; Financial Reporting; Profit; Performance Improvement; Order Taking and Fulfillment; Performance Evaluation

Citation

Kaplan, Robert S. "Midwest Office Products." Harvard Business School Case 104-073, March 2004. (Revised April 2005.)
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About The Author

Robert S. Kaplan

Accounting and Management
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More from the Author
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  • We Need Better Carbon Accounting. Here's How to Get There. By: Robert S. Kaplan and Karthik Ramanna
  • A Career Life-Cycle Perspective on Women's Health and Safety By: Robert S. Kaplan, Chizoba L. Chukwura, Gregory H. Gorman, Vivian S. Lee, Chester B. Good, Kathleen L. Martin, Gregory A. Ator and Michael D. Parkinson
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