The purpose of this report is discussing the case of Wilkerson Company that confronting tough competition in price cutting in pumps which caused to a big drop of pre-tax operating income from 10% to 3%. After observing the existing costing allocation‚ we found out there is an issue on the existing costing report that the manager could not be able to see the real situation. In light of this‚ there will be brought to the discussion on the feasibility of using an alternative costing method – Activity
Premium Cost accounting Costs Cost
What would an ABC system look like at Wilkerson? What are the revised product costs and margins under such a system? Assumptions: We are assuming that the SG&A costs have no direct effect on the costing for each product line. SG&A was kept the same‚ whether using the original costing method or ABC costing. Calculations for ABC Costing: Machine Expense: $336‚000/11‚200 = $30 per machine hour Setup Expense: $40‚000/160 = $250 per setup Engineering Expense: $100‚000/1‚250 = $80
Premium Gross margin
related to Wilkerson Company‚ which is a manufacturer of a few products supplied to manufacturers of water purification equipment. The three products they manufacture are: 1. Valves- high quality and highest tolerances in the industry; this product is what the company started from. 2. High-volume pumps- quickly became a major supplier of pumps; they manufacture and spend more machine hours on producing this product 3. Flow controllers- most unique and highest selling product. Wilkerson Company would like
Premium Cost Activity-based costing Cost driver
Costing Responsibility Centres and Products Case Study: Wilkerson Company Lessons learned from this topic and case study: 1. Managers need to be able to estimate the costs of different responsibility centres and products to assist with monitoring the performance of different departments and also to assist with decision making about product pricing‚ profitability of individual products‚ assist with decisions when making changes to product lines and various other managerial requirements such
Premium Cost Costs Management
Wilkerson Company 1. What is the competitive situation faced by Wilkerson? The critical product in term of market competition is the pumps of Wilkerson Company. The pumps are Wilkersons major product line with a production of about 12‚500 units per month. Pumps currently have the lowest gross margin among all products‚ because competitors had been reducing prices on pumps and Wilkerson adopted its prices in order to remain competitive and to maintain the volume. 2. Given some apparent problems with
Premium Cost accounting Costs Cost
98 AS 6 (revised 1994) Accounting Standard (AS) 6 (revised 1994) Depreciation Accounting Contents INTRODUCTION Definitions EXPLANATION Paragraphs 1-3 3 4-19 Disclosure 17-19 MAIN PRINCIPLES 20-29 94 AS 6 (issued 1982) Depreciation Accounting 99 Accounting Standard (AS) 6* (revised 1994) Depreciation Accounting [This Accounting Standard includes paragraphs set in bold italic type and plain type‚ which have equal authority. Paragraphs in bold italic
Premium Depreciation
Managerial Accounting E3 Group 1 WILKERSON CASE 1. How does Wilkerson’s existing cost system operate? Simple cost accounting system (One-‐cost pool) Product costs: direct labor‚ direct materials‚ manufacturing overhead. The overhead costs were allocated to products as a percentage of production-‐run
Premium Cost Price Costs
------------------------------------------------- A ------------------------------------------------- Case Study ------------------------------------------------- On ABRAMS COMPANY ------------------------------------------------- Of ------------------------------------------------- Management control System ------------------------------------------------- ------------------------------------------------- Presented to
Premium Inventory Balance sheet Asset
1. The process flow diagram of the production system at Donner. Preparation Stage Imagine Transfer Fabrication 2. What size orders would you schedule on the CNC drill? On the CNC router? Time taken to process the orders depends on the selected drilling method either a) Manual drilling or CNC OR b) Using CNC Drill Assumption 1: Manual Drilling is not done on all the available Manual Drill Presses in parallel. Calculating time taken for Manual drilling and CNC Drilling: = Setup
Premium Drill
curently being faced by the company? The company facing the different competitive situations between the products‚ gross margin of values are maintained at 35% and produce in standered. Flow controlers are custmized products‚ and less competitive market power. Pumps are comodity products produced in high voulume at high price for a market. Wilkerson is a quality leader although his competitor also have a best match with him. Butt there is no competition in price facing by wilkerson‚ and there is no chances
Premium Costs Cost Cost accounting