Wilkerson Company

ABC cost system

Exhibit 1.a
Machine expenses
Setup Labor
Receiving and production control
Engineering
Pachaging and Shipping

336,000.00
40,000.00
180,000.00
100,000.00
150,000.00
$ 806,000.00
Valves

Production units
Machine hours
Production runs
Number of shpments
Hours of engineering work

Cost Pool
Machining
Setup Labor
Receiving
Engineering
Packaging

Pumps
7,500
3,750
10
10
250

12,500
6,250
50
70
375

Flow Controllers
TOTAL
4,000
24,000
1,200
11,200
100
160
220
300
625
1,250

COST ASSOSIATED WITH COST POOL

Machining
Setup Labor
Receiving
Engineering
Packaging
Calculations: Cost pool / Cost Driver = Overhead per unit
Price per unit * Cost Driver = cost assosiated with cost pool

Unit
Valves
Pumps
Flow Controllers
TOTAL
$
30.00 $ 112,500.00 $ 187,500.00 $
36,000.00 $ 336,000.00
$
250.00 $
2,500.00 $
12,500.00 $
25,000.00 $
40,000.00
$ 1,125.00 $
11,250.00 $
56,250.00 $
112,500.00 $ 180,000.00
$
80.00 $
20,000.00 $
30,000.00 $
50,000.00 $ 100,000.00
$
500.00 $
5,000.00 $
35,000.00 $
110,000.00 $ 150,000.00
$ 806,000.00

Cost Driver
Machine hours
Production runs
Production runs
Hours of engineering work
Number of shipments

Exhibit 2.a
Selling Price
Direct Materials
Direct Labor
Manufacturing Overhead
Machine expenses
Setup Labor
Receiving and production control
Engineering
Pachaging and Shipping
Gross Margin
Gross Margin %

Direct labor cost

Direct material cost
Manufacturing overhead
Standard unit costs
Target selling price
Planned gross margin %
Actual selling price
Actual gross margin %
Calculations: Selling Price - DM-DL-MO= Gross Margin
Gross Margin / Selling Price = Gross Margin %

Valves
Pumps
Flow Controllers
$ 86.00 $ 87.00 $
105.00
16.00
20.00
22.00
10.00
12.50
10.00
15.00
15.00
0.33
1.00
1.50
4.50
2.67
2.40
0.67
2.80
$ 39.83 $ 28.80 $
46.32% 33.10%

9.00
6.25
28.13
12.50
27.50
(10.38)
-9.88%

Valves
Pumps
Flow Controllers
10.00
12.50
10.00
16.00
20.00
22.00
20.17
46.17

25.70
58.20

83.38
115.38

86.15
35%

107.69
35%

95.38
35%

86.00
46.32%

87.00
33.10%

105.00
-9.88%