Wilkerson case direc#4564D5

# Wilkerson case direc#4564D5 - (Activity Rates times Total...

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Wilkerson Company Quantitative Analysis of Traditional vs. ABC Unit Product Costs The case is in the back of the customized textbook, just after the blue page. 1. Calculate the product costs per unit for valves, pumps, and flow controllers using Activity Based Costing to allocate manufacturing overhead, including the following: a. Allocate manufacturing overhead to activities (i.e. calculate activity costs) (See Exhibit 1). This is the first allocation in the process. This information is given in Exhibit 1 under Manufacturing Overhead. No computations are necessary in this step. b. Determine total activity levels of cost drivers for each activity (See Exhibit 4). This information is given in Exhibit 4 in the Total column. No computations are necessary in this step. c. Calculate activity-based overhead rates (i.e. Activity Rates) – using the information from a and b above. d. Allocate manufacturing overhead to the valves, pumps, and flow controllers in total

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Unformatted text preview: (Activity Rates times Total Activity for each product). This is the final allocation in the process. e. Calculate ABC based manufacturing overhead per unit for valves, pumps, and flow controllers. f. Calculate total product costs per unit for valves, pumps, and flow controllers. 2. Compare the current total product costs per unit calculated using the plantwide P.O.R. ( in Exhibit 2) to the total product costs per unit calculated in (1) above for valves, pumps, and flow controllers. 3. Calculate and compare the target selling price using a target gross margin % of 35% under the two overhead allocation methods (standard – given in the case and the ABC target selling price you computed) for valves, pumps, and flow controllers (See Exhibit 2). Hint – this is NOT cost plus 35%! 4. Calculate and compare the actual gross profit % using current pricing under both allocation methods for valves, pumps, and flow controllers (See Exhibit 2)....
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Wilkerson case direc#4564D5 - (Activity Rates times Total...

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