Northflow Solutions, Inc.: Using ABC to create a new pricing model
Steven Johnson, Paul Brennan
November 1, 2018
Finance & Accounting
cost accounting, activity based costing, cost allocation, cost-plus pricing
Journal of Case Studies
Ben was eager to get started on his new assignment for Northflow Solutions, Inc. His direct supervisor, Monica, had given him all of the details necessary, and he had reviewed the entire file. The company had not increased prices in nearly 15 years, and they were concerned that their current method for allocating overhead using a single rate was inaccurate. Ben’s task was to use Activity Based Costing (“ABC”) to improve the accuracy of overhead allocation. After doing so, he would be able to help Northflow Solutions, Inc. improve their pricing model and profitability by customer.