1. (*) The case implies that the top managers at Wilkerson know their three product lines and the markets in which they compete very well. For each of the three major product lines, identify key features of the product, its customers and the competitive environment. 2. Use the production and operations data of Exhibit 4 to reallocate the manufacturing overhead costs in a manner that reflects the actual use of overhead resources. (Note: assume that information in Ex. 4 relates to total production of the product including its components) Diagram the new cost system using conventions that we developed in the earlier classes [e.g., trace all costs from accounting categories to products]. 3. Why are the findings of Knight's task force troubling? How might these findings alter what managers know' about the products and their respective markets? 4. (*) Calculate new total per unit product costs for the valves, pumps and flow controllers. Compare the costs that you calculated to the standard unit products costs in Exhibit 2. What causes the different product costing methods to produce such different results? 5 How does your comparison in question 4 relate to what Wilkerson is experiencing in the market? 6. If Wilkerson adopted the new approach to allocating overhead that you have devised and nothing else changed (e.g., production and sales volumes are identical, prices are left unchanged and the same production processes are employed), how much higher or lower would costs be after one year? Explain. 7. (*) What are the implications of the last paragraph in the case [re: peak demand period] for interpreting data on what it costs to make these products? Re-compute the product costs in question 4 using the information supplied in the last paragraph. Which product costs should be used to determine product profitability? Explain the reasons for your selection. 8. Wilkerson experiences varying capacity utilization during the year. In contrast, in the last class Bridgeton experienced a relatively sudden, longterm decline in demand. How do these differences influence your thinking about how costs of "excess capacity" should be treated in cost accounting? 9. What actions for profit improvement are suggested by the findings of Knight's