Kanthal Case
...d costs (i.e. set-up costs) and other activities used to produce non-stock items. As well SG&A costs are assigned based on volume. 3. Five strategic initiatives that Ridderstale should take in regards to unprofitable customers under the new cost accounting method: - Conduct a review to see if there are any non-stock products that appear to be ordered in large enough amounts that the company could stock them and reduce non-stock costs. - Out-source the manufacturing of non-stock items with the hopes of getting the products made at a cheaper price than Ridderstale could produce them at. - Implement an ordering incentive mechanism that would induce non-stock customers to order larger amounts of goods in order to reduce productions costs and as well reduce the number of times non-stock items are ordered. - Do not change anything at all as despite the customer appearing to bring in a lose on a cost-allocation basis, these customers bring in a profit margin to the company that in the end covers total overhead costs. - Conduct a review to find out where in the production chain that certain non-stock variables get added to the product. In finding this area, the company can mass produce all products to this point, then complete a percentage of these items to its finish product for stock and retain the remainder for non-stock orders. Doing will give cost savings based on economy of scale for the production of all products up the non-stock area and then reduce the production time for non-stock items. 3. Five strategic initiatives that Ridderstale should take in regards to unprofitable customers under the new cost accounting method: - Conduct a review to see if there are any non-stock products that appear to be ordered in large enough amounts that the company could stock them and reduce non-stock costs. - Out-source the manufacturing of non-stock items with the hopes of getting the products made at a cheaper ...