their cost drivers were and what drove their profitability. Tech Data having implemented an ABC system in 1997, experienced satisfactory earnings while competition struggled and the overall market declined. In 2003, although they experienced revenue loss, they were able to hold their sales and general expenses before special charges to 3.89 percent of revenue. This was more than a percentage point less than their competitor (Sherrat, 2003, p. 60).
             ABC works best by looking at all of the resources that a company utilizes, ties them back to the activities achieved and relates all those activities to the products they make, services performed, or projects completed. Resources are how the organization spends their money. These can include people cost, supplies, space, equipment and utilities. Activities are the events completed, such as production, quality testing, customer visits, and product storage to name a few. Cost objects can be products, customers, services, or projects (Taylor, 2002, p. 51).
             ABC can yield some major benefits for a company. Some of these benefits are competitive pricing, product profitability, client profitability, and benchmarking. Competitive pricing can be obtained by aligning costs drivers with the correct product, especially within the high volume products that seemed to be getting more than their fair share of the overhead associated with traditional costing. Knowing which products yield you the most profitability helps you to understand the 80/20 profitability rule as it pertains to your company. The 80/20 profitability rule helps you to identify the 20% of your products that are your money makers and make 80% of your profit. It also helps you to identify those products which are your profit takers. Based upon this knowledge, the companies are able to make key decisions such as what their product portfolio should contain (Dube, 2002, p. 14).
             The same goes for client profitability, if yo...