Wilkerson Case

3. Wilkerson currently uses a traditional volume-based, full absorbing exist brass. Each whole of product speak to consists of askly material, direct labor, and manufacturing overhead embodys which are allocated based on direct labor cost at a 300% rate. The mill cost flow diagram is shown below.
quantity Manufacturing Overhead: 806,000 |
Total labor cost: 271,250 |
Manufacturing cost rate per labor cost: 300%|
| Labor cost per unit| | Manufacturing cost per unit|
Valves| $10.00| $10.00*300%| $30.00|
Pumps| $12.50| $12.50*300%| $37.50|
carry Controllers| $10.00| $10.00*300%| $30.00|

| Valves| Pumps| Flow Controllers|
steer Labor| $10.00| $12.50| $10.00|
Direct Material| 16.00| 20.00| 22.00|
Manufacturing Overhead| 30.00| 37.50| 30.00|
Total cost| $56.00| $70.00| $62.00|
However, Wilkerson has very high total manufacturing cost, and its three products have divers(a) consumption manners of indirect cost. Therefore, the traditional volume-based cost system is inadequate.

4. The ABC costing diagram is shown below.




Activity Pool| weapon related expense$336,000| Setup Labor$40,000| Receiving and production fake$180,000| Engineering$100,000| Packing and shipping$150,000|
Cost driver| cable car arcminute11,200| Production run160| Production run160| Engineering hour1,250| # of warhead300|
Rate| $30/hour| $250/run| $1,125/run| $80/hour| $ five hundred/shipment|
Valves| $30*0.5| $250*10/7,500| $1,125*10/7,500| $80*250/7,500| $500*10/7,500|
| $15.00| $0.33| $1.50| $2.66| $0.67|
Pumps| $30*0.5| $250*50/12,500| $1,125*50/12,500| $80*375/12,500| $500*70/12,500|
| $15.00| $1.00| 4.50| 2.40| $2.80|
Flow controllers| $30*0.3| $250*100/4,000| $1,125*100/4,000=| $80*625/4,000| $500*220/4,000|
| $9.00| $6.25| $28.13| $12.50| $27.50|

Cost per unit under ABC system?
| Valves| Pumps| Flow Controllers|
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