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Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,2020/9/14,#,Wilkerson Case Study,1. How does Wilkersons existing costing system operate?,2. Develop an ABC model and estimate product profitability,of the 3 product lines:,a) What are the cost drivers?,b) What are the cost driver rates?,c) What are the differences in product profitability vs the current system?,d) What causes these differences?,3. What actions might be appropriate for improving profitability?,1. How does Wilkersons existing costing system operate?,Machine,Expense,$336k,Set-Up,Labour,$40k,Receiving/,Prod. Control,$180k,Packaging/,Shipping,$150k,Engineering,$100k,Production Cost,Centre,$806k,Valves, Pumps,Flow Controllers,300% x Direct Labour Cost,Direct material $,Direct labour $,1. Product Profitability Analysis (current system),Valves,$,Pumps,$,Flow Controllers,$,Direct labour,10.00,12.50,10.00,Direct materials,16.00,20.00,22.00,Overheads (= 300% x Direct labour),30.00,37.50,30.00,Total cost,56.00,70.00,62.00,Price,86.00,87.00,105.00,Margin (%),30.00,(34.9%),17.00,(19.5%),43.00,(41.0%),2 a) ABC Cost Drivers,Activity,Cost,$,Cost Driver,Machine components,336,000,Machine hours,Set up machines,40,000,No. of production runs,Receive and schedule components,180,000,No. of production runs,Provide engineering support,100,000,Engineering hours,Pack and ship components,150,000,No. of shipments,2 b) ABC Cost Driver Rates,Activity,Cost,$,Cost Driver,Activity,Cost Driver Rate,Machine components,336,000,Machine hours,11,200,$30/m/c hr,Set up machines,40,000,No. of production runs,160,$250/run,Receive and schedule components,180,000,No. of production runs,160,$1,125/run,Provide engineering support,100,000,Engineering hours,1,250,$80/eng. hr,Pack and ship components,150,000,No. of shipments,300,$500/,shipment,2 c) ABC Overhead Analysis: Summary,Valves,Pumps,Flow Controllers,ABC Overhead/unit:,Machine-related,15.00,15.00,9.00,Set-up,0.33,1.00,6.25,Receiving and production control,1.50,4.50,28.13,Engineering,2.67,2.40,12.50,Packaging and shipping,0.67,2.80,27.50,Total,20.17,25.70,83.38,Under current system,30.00,37.50,30.00,2 c) ABC Overhead Analysis: Detailed Workings: Valves,1,Cost Driver Rate,2,Activity for Valves,3 = 1 x 2,Allocation to Valves in Total,$,4 = Column 3/7500,Per unit Cost,$,ABC Overhead,Machine-related,$30/m/c hr,3,750,112,500,15.00,Set-up,$250/run,10,2,500,0.33,Receiving and production control,$1,125/run,10,11,250,1.50,Engineering,$80/eng. hr,250,20,000,2.67,Packaging and shipping,$500/,shipment,10,5,000,0.67,Total,20.17,2 c) ABC Overhead Analysis: Detailed Workings: Pumps,1,Cost Driver Rate,2,Activity for Pumps,3 = 1 x 2,Allocation to Pumps in Total,$,4 = Column 3/12,500,Per unit Cost,$,ABC Overhead,Machine-related,$30/m/c hr,6,250,187,500,15.00,Set-up,$250/run,50,12,500,1.00,Receiving and production control,$1,125/run,50,56,250,4.50,Engineering,$80/eng. hr,375,30,000,2.40,Packaging and shipping,$500/,shipment,70,35,000,2.80,Total,25.70,2 c) ABC Overhead Analysis: Detailed Workings: Flow Controllers,1,Cost Driver Rate,2,Activity for Flow Contrs,3 = 1 x 2,Allocation to Flow Contrs in Total,$,4 = Column 3/ 4,000,Per unit Cost,$,ABC Overhead,Machine-related,$30/m/c hr,1,200,36,000,9.00,Set-up,$250/run,100,25,000,6.25,Receiving and production control,$1,125/run,100,112,500,28.13,Engineering,$80/eng. hr,625,50,000,12.50,Packaging and shipping,$500/,shipment,220,110,000,27.50,Total,83.38,2 c) Product Profitability Analysis: ABC,Valves,$,Pumps,$,Flow Controllers,$,ABC Analysis:,Direct labour,10.00,12.50,10.00,Direct materials,16.00,20.00,22.00,Overheads,20.17,25.70,83.38,Total cost,46.17,58.20,115.38,Price,86.00,87.00,105.00,Margin,%,39.83,46.3%,28.8,33.1%,(10.38),-9.9%,Existing System:,Margin,%,30.00,34.9%,17.00,19.5%,43.00,41.0%,2 c) What does the ABC analysis reveal?,Valves are highly profitable,Pumps achieve target margin (Wilkerson was right to match competitors price reduction),Flow Controllers are barely profitable (no wonder competitors did not undercut Wilkersons recent price increase),Valves,Pumps,Flow Controllers,Machine hours per unit,0.5,0.5,0.3,Units per production run,750,250,40,Units per shipment,750,179,18,Engineering cost per unit,$2.67,$2.40,$12.50,Flow Controllers are produced and shipped in smaller batches,and require much more engineering support,2 d) What has caused the differences in profitability?,结束语,当,你尽了自己的最大努力,时,，,失败,也是伟大,的，所以不要放弃，坚持就是正确的。,When You Do Your Best, Failure Is Great, So DonT Give Up, Stick To The,End,谢谢,大家,荣幸,这,一路，与你同行,ItS An Honor To Walk With You All The,Way,演讲人：,XXXXXX,时 间：,XX,年,XX,月,XX,日,
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