Wilkerson Case Analysis

In: Business and Management

Submitted By schueltr
Words 1063
Pages 5
Todd Schueler
Week 2 Assignment 1:
Wilkerson Company Case Analysis Questions 3, 4, and 6
Saturday, April 05, 2014

3.) The estimated product costs for valves, pumps, and flow controllers using ABC for overhead activities (primarily Ex. 1 & 4) and direct cost data from the Exhibits are: * The Valves total product variable costs are $195,000, the Valves total fixed costs are $149,990.31 and the Activity Based Costing Valve cost per unit it $46. * The Pumps total product variable costs are $406,250, the Pumps total fixed costs are $316,501.94 and the Activity Based Costing Pumps cost per unit it $58. * The Flow Controllers total product variable costs are $128,000, the Flow Controllers total fixed costs are $339,507.75 and the Activity Based Costing Flow Controllers cost per unit it $116.
4.) In comparing ABC costs to the standard unit costs, both the methods and the product characteristics (Ex. 2), the causes of such different results are: ABC costs are Manufacturing Overhead: Machine-related expenses, Set Labor, Receiving and production control, Engineering, Packaging and shipping. Standard unit costs are Variable Costs: Direct Labor and Direct Materials. The physical numbers are different Total Cost for Valves in SUC is $56 and $46 in ABC a change of -18%, Total Cost for Pumps $70 and $58 in ABC a change of -17%, Total Cost for Flow Controllers $62 and $116 in ABC a change of 89%. “Traditional allocation systems pool costs by departments, then allocate departmental cost pools to cost objects using volume-based cost drivers. In contrast, ABC systems pool costs by activity centers, then allocate activity center cost pools to cost objects using a variety of volume and activity based cost drivers. ABC systems use many more activity centers than the number of departments in a traditional allocation system. As a result, ABC improves…...

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