Managers Decide
ABC and Dairy Products
ABC has been used to analyze the profitability of products in the diary case of food retailers. Milk was found to be the most profitable item,taking up just 23 percent of the space in the diary case yet providing 25 percent of the revenues and 34 percent of the profits.The activity- based unit cost for dairy items was calculated using distribution activities,space,and time on the shelf.The average activity-based cost for a diary-case item was…. With juice costing ….and milk less than…ABC also revealed that per-unit cost is affected by the type of handling activities used.Costs can be lowered by an appropriate choice of a stocking activity.For example,front-loading and hand-stock costs…cents per item whereas using a roll-in cart for stocking costs only …..cents per unit.