industry of manufacturing water purification equipment. By identifying a market for water purification valves‚ Destin Brass quickly built brand awareness and a customer base. Destin Brass developed propriety manufacturing techniques and had a deep understanding of working with brass. This competitive advantage led Destin Brass to add pumps and flow controllers to its product range. Valves‚ Pumps and Flow Controllers represented 24%‚ 55% and 21% of company revenues respectively with each having
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Use the Overhead Cost Activity Analysis in Exhibit 5 and other data on manufacturing costs to estimate product cost for valves‚ pumps‚ and flow controllers. Exhibit 1 shows the estimated product costs for vales ($37.70)‚ pumps ($48.79)‚ and flow controller ($100.76) using the information provided in the Destin Brass case study. Exhibit 1: Estimated Product Costs for Valves‚ Pumps‚ and Flow Controllers 2. Compare the estimated costs you calculate to existing standard unit cost (Exhibit
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another product line partially made up the loss. We will discuss the detailed situation line by line. (1) Valves It was the first product line developed by Wilkerson and its high quality brought it a loyal customer base. Even if several competitors could match Wilkerson’s quality in valves‚ none had tried to gain market share by cutting price. Therefore the competitive situation for valves was not so fierce that Wilkerson could maintain its gross margin. (2) Pumps Pump product line’s characteristic
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The company has established a strong brand name in the industry because of the high quality of its valves. Over the year‚ the company has extended their product range to pumps and flow controllers. The main learning outcome from analyzing the case study is manufacturing overhead cost allocation. Exhibit 2 in the case study shows pumps has a highest manufacturing overhead cost compare to valves and flow controller. The common overhead cost drivers in the production are machine hours‚ production
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Based Costing……………………………..11 Working Example……………………………………………………………………………...13 ABC and the Service Sector……………………………………………………………….…...15 Important Factors in ABC Implementation…………………………………………………....15 Advantages of using ABC……………………………………………………………………...16 Uses & Managerial Applications of ABC……………………………………………….……..17 Demerits & Limitations of ABC………………………………………………………....…….19 Practical industrial implementation of ABC………………………………………….....……..21 1. Keshari and co………………………………………………………………..…
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ABSTRACT The quest for an engine which having the same or more power with higher fuel efficiency than the existing ones has started before many years. As a result of all these researches a new engine concept is formed‚ which is a six stroke engine. Lot of research works are conducting on this topic nowadays and already six types of six stroke engines were discovered yet. Of these the resent developed three six stroke engines‚ i.e.‚ Beare head‚ Bruce crowers and Velozeta’s are undergoing tremendous
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competitors led to a drop of Wilkerson’s pre-tax margin to under 3%‚ gross margin on sales for pump sales has fallen below 20%. Flow controllers are customized products‚ sold in a less competitive market with inelastic demand at the current price range. Valves are standard‚ produced and shipped in large lots - gross margins have been maintained at 35%. Wilkerson is a quality leader‚ but this leadership may soon be contested by several competitors. Although they are able to match Wilkerson ’s quality‚ there
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(7%*$30000/4000) $0.525 Total Cost per Flow Controller $100.755 2 Cost | Traditional | Revised | ABC | Set-up | 16.45% | 71.43% | 71.43% | Machine Depreciation | 16.45% | 7.4% | 7.4% | Receiving & Handling | 16.45% | 19.2% | 78% | Engineering | 16.45% | 7.4% | 50% | Packing & Shipping | 16.45% | 7.4% | 73% | Maintenance | 16.45%
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appropriate method of overhead cost allocation. In Sippican’s case the traditional accounting method is used‚ which does not reflect the real resource usage of the different product lines. The correct method in this case would be to apply the time-driven ABC approach for cost allocation. Such method apart from showing the actual profitability after all cost deductions also depicts the differences in resource usage rates between the products and‚ thus‚ allows for identification of cost drivers. A contribution
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section‚ “Why Overhead Rates Are Predetermined‚” especially in later discussions of the overhead volume variance. We have placed emphasis on the flexible overhead budget to help minimize these learning difficulties. We feel that the new section on ABC provides the appropriate level of depth for a required course. Students need to
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