MDM - Wilkerson Case Requirements

MDM - Wilkerson Case Requirements - Sherrie Zollinger, Ilya...

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Sherrie Zollinger, Ilya Gouts, Carlos Ceron, Dewan Simon GM8102 Managerial Accounting Wilkerson Case October 30, 2011 1. Considering Wilkerson’s competitive environment, production processes and current accounting system. What red flags do you see which may signal that the current cost system is distorting product costs (relate these specifically to the situation at Wilkerson)? Also discuss (using Wilkerson specifics) whether Wilkerson has the three necessary conditions for ABC to be helpful. Wilkerson is facing the Following Red Flags with their current managerial accounting system: Their standard high volume pumps are showing losses while the complex low-volume valves are showing significant profits. Knight, from the finance group, is starting to question their product cost calculations and is unsure if their current approach gives them appropriate accuracy so she is starting a small task force to investigate situation. Scott, the manufacturing manager, believes his competitors are missing an opportunity for profit in flow controllers, because it appears to them that they are winning with a product they believe is priced relatively high. Knight, can’t understand how competitors can charge such low prices for pumps and, for valves; it appears that they have a profitable niche all to themselves. Wilkerson has not changed its costing system as they have added new customers, expanded product offerings, and updated their operations to more modern assets. Customers haven’t complained about price increases on flow controllers.
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MDM - Wilkerson Case Requirements - Sherrie Zollinger, Ilya...

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