Midwest Office Products was underestimating the profitability of each order based on the true expenses of both
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Midwest Office Products was underestimating the profitability of each order based on the true expenses of both the delivery mechanism (freight vs. truck delivery) and late payments while using the "standard method" (interest of 1 percent per month). As a result, certain orders (such as # 2 above) appear successful until you find they paid late and the goods were delivered at a high cost ($300). This consumed the entire deal's margin, leaving no room for profit.
Related Book For
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
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