Part C:

You are required to prepare a proposal on the potential benefits and costs of implementing an Activity Based Costing (ABC) system to determine customer profitability for a grocery wholesaler, Santana Corporation. The company currently use a conventional costing system. The clients of Santana Corporation vary in size and therefore the smaller supermarket operators will tend to place many smaller orders, whereas the larger supermarkets will place larger orders but less often.

Required:

1. Advise Santana Corporation on suggested activities and activity drivers, explaining to management why you consider these appropriate.

2. Using at least two academic research articles to support your background research, advise the management of Santana Corporation on the potential benefits and costs associated with implementing an Activity Based Costing system.