2,152,500 271,250 458,000 100% 13% 21% Sales Direct Labor Expense Direct Material Expense MOH Machine related Exps 336,000 Setup Labor 40,000 Receiving&Production Control 180,000 Engineering 100,000 Pack. & Ship. 150,000 Total MOH Gross Margin General Selling and Administrative Exps Operating Income (pre-tax) 806,000 617,250 559,650 57,600 37% 29% 26% 3% Valves DL Cost DM Cost MOH (300%) Standard Unit Cost 10.00 16.00 30.00 56.00 Pumps 12.50 20.00 37.50 70.00 Flow Controllers 10.00 22.00 30.00 62.00 Target Selling Price Planned Gross Margin (%) 86.15 35.00% 107.69 35.00% 95.38 35.00% Actual Selling Price Actual Gross Margin (%) 86.00 34.88% 87.00 19.54% 105.00 40.95% Materials per unit Quantity 2 2 Valves Rate $ 2.00 $ 6.00 Total $ 4.00 $ 12.00 Quantity 3 2 Pumps Rate $ 2.00 $ 7.00 $ $ Total 6.00 14.00 Flow Controllers Quantity Rate 4 $ 1.00 $ 5 $ 2.00 $ 1 $ 8.00 $ 10 $ Total 4.00 10.00 8.00 22.00 Material Costs Per Unit 4 $ 16.00 $ 20.00 Direct Labor per unit DL $'s per unit (@ $25/DLH) 0.40 10.00 0.50 12.50 0.40 10.00 $ $ $ Machine Hours per unit 0.50 0.50 0.30 Valves 7,500 3,750 Pumps 12,500 6,250 50 Flow Controllers 4,000 1,200 Production (units) Machine Hours Production Runs Number of Shipments Hours of Engineering Work Total 24,000 11,200 160 300 1,250 10 100 70 220 10 250 375 625 0.5 0.5 0.3000 0.466666667 2. Using the data in Exhibit 1 through Exhibit 4, develop an activity-based costing system for Wilkerson and compute the costs (per unit) and product margins (per unit) for valves, pumps, and flow controllers under the activity-based costing system. Calculations should show ***all intermediate steps*** used to arrive at these amounts. Calculations/table should be well formatted and appropriate cell references used from preceding steps and given data. 3. Compare the cost and profit margin of Wilkerson's three product lines based on its existing cost system and activity-based costing system. What caused the changes in cost and profit margin of three product lines? Which cost system do you think Wilkerson should use and why? 2,152,500 271,250 458,000 100% 13% 21% Sales Direct Labor Expense Direct Material Expense MOH Machine related Exps 336,000 Setup Labor 40,000 Receiving&Production Control 180,000 Engineering 100,000 Pack. & Ship. 150,000 Total MOH Gross Margin General Selling and Administrative Exps Operating Income (pre-tax) 806,000 617,250 559,650 57,600 37% 29% 26% 3% Valves DL Cost DM Cost MOH (300%) Standard Unit Cost 10.00 16.00 30.00 56.00 Pumps 12.50 20.00 37.50 70.00 Flow Controllers 10.00 22.00 30.00 62.00 Target Selling Price Planned Gross Margin (%) 86.15 35.00% 107.69 35.00% 95.38 35.00% Actual Selling Price Actual Gross Margin (%) 86.00 34.88% 87.00 19.54% 105.00 40.95% Materials per unit Quantity 2 2 Valves Rate $ 2.00 $ 6.00 Total $ 4.00 $ 12.00 Quantity 3 2 Pumps Rate $ 2.00 $ 7.00 $ $ Total 6.00 14.00 Flow Controllers Quantity Rate 4 $ 1.00 $ 5 $ 2.00 $ 1 $ 8.00 $ 10 $ Total 4.00 10.00 8.00 22.00 Material Costs Per Unit 4 $ 16.00 $ 20.00 Direct Labor per unit DL $'s per unit (@ $25/DLH) 0.40 10.00 0.50 12.50 0.40 10.00 $ $ $ Machine Hours per unit 0.50 0.50 0.30 Valves 7,500 3,750 Pumps 12,500 6,250 50 Flow Controllers 4,000 1,200 Production (units) Machine Hours Production Runs Number of Shipments Hours of Engineering Work Total 24,000 11,200 160 300 1,250 10 100 70 220 10 250 375 625 0.5 0.5 0.3000 0.466666667 2. Using the data in Exhibit 1 through Exhibit 4, develop an activity-based costing system for Wilkerson and compute the costs (per unit) and product margins (per unit) for valves, pumps, and flow controllers under the activity-based costing system. Calculations should show ***all intermediate steps*** used to arrive at these amounts. Calculations/table should be well formatted and appropriate cell references used from preceding steps and given data. 3. Compare the cost and profit margin of Wilkerson's three product lines based on its existing cost system and activity-based costing system. What caused the changes in cost and profit margin of three product lines? Which cost system do you think Wilkerson should use and why
