Answered the following questions but having an hard time figuring out question 5. Below are all the

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Question:

Answered the following questions but having an hard time figuring out question 5. Below are all the questions and what I answered except for question 5.

1.Why was Dakota's existing pricing system no longer appropriate to be used in its current operating environment? Be as specific and as detailed as you can be based on the facts given in the case.

Years:

From the article, the company has been using the traditional method of costing its products. DOP(Dakota Office Products) has ordered supplies from many different manufactures. It priced products to its end-use customers marking up the purchased product cost by about 15% to cover the cost of warehousing, distribution, and freight. Then another markup to cover the approximate cost for general and selling expenses plus an allowance for profit. These markups are not being calculated based on the current expenses; they being based on prior years. However, there was an additional markup for the desktop delivery.

To me, it doesn't look like their accounting system for the cost of the product is inefficient; it's not up to date about possible cost drivers of the product. For example, what if there's a sale? What will be the potential cost that will be incurred if this were to happen? The sale will be unidentified. DOP will need to look at possible cost centers of the product so that the cost can be measured reliably. After this is done, the costs can be allocated accordingly to the manual orders and desktop orders...depending on the number of orders placed by the customer(s).

2.The indirect resources are provided in the top row and the activities are provided in the bottom row.Fill in the names of the two other activities.