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Instructional case: Blue Ridge Revisited—Integrating ABC and OROS Quick® software

Author

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  • Blocher, Edward
  • Shastri, Karen
  • Stout, David E.
  • Swain, Monte R.

Abstract

Blue Ridge Manufacturing Company produces customized towels for the US sports market. Recently, competitive pressures motivated the company to institute an activity-based costing (ABC) system for allocating manufacturing support costs to its major product lines. Management is pleased with the manufacturing cost information that the ABC system is providing and is beginning to use the ABC data to drive process improvements. To secure additional gains, management is now interested in conducting a customer profitability analysis. Currently, the company allocates its Selling, General, and Administrative (SG&A) costs to products and/or customers on the basis of sales volume (units). The question posed to you, in your role as a member of a team of managerial accountants, is whether the SG&A costs can be more accurately assigned to customer groups (“large,” “medium,” and “small,” as determined by sales volume). To this end, you have been asked to build and interpret the results of an ABC model that assigns SG&A costs to each of these three customer groups. Blue Ridge has recently implemented a new software system that includes an ABC module (called OROS Quick®), which you will use to build your cost assignment model and to respond to a number of managerial questions based on the cost analysis you perform.

Suggested Citation

  • Blocher, Edward & Shastri, Karen & Stout, David E. & Swain, Monte R., 2009. "Instructional case: Blue Ridge Revisited—Integrating ABC and OROS Quick® software," Journal of Accounting Education, Elsevier, vol. 27(2), pages 85-103.
  • Handle: RePEc:eee:joaced:v:27:y:2009:i:2:p:85-103
    DOI: 10.1016/j.jaccedu.2010.02.002
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    Cited by:

    1. Sledgianowski, Deb & Gomaa, Mohamed & Tan, Christine, 2017. "Toward integration of Big Data, technology and information systems competencies into the accounting curriculum," Journal of Accounting Education, Elsevier, vol. 38(C), pages 81-93.
    2. Zahller, Kimberly A., 2017. "Truffle in paradise: Job costing for a small business," Journal of Accounting Education, Elsevier, vol. 40(C), pages 32-42.

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