This is a case study question on ABC Costing in the book, Manegerial Accounting by Datar and Rajar

Wilkerson Company 25 case Wilkerson Company obert S. Kaplan Rabert Parker reeident of the Wilkerson Compeny, was decussang operaling results in the Peggy Kright, his controler, and John Soott, his manufacturing mansger. tre atost month with omnnn the three was taking place in an atmosphere tinged with apprehension becavas reelor had been reducing pices on pumps, Wikerson's product, Parker had soen no aternatve but to match the reduced prices to But the price cuts had led to decining compery profts, especialy in the pump a mmary operating results for the previous month, March 2000, are shown in Wikerson Parkespum wers a commodity mantan volume ine and for Exibits T and 2) 2kerso n supplied products to manufacturers of water purfcation equipment. The compary iated with a unique design for vaves that it coud produce to tolerances that were beter n the industry. Parker quicky established a loyal customer base because of the high f its mnufactured vaves. He and Scott realized that Wikerson's exdsting abor skils and inng equipment could also be used to produce pumps and fow controlers, products that also purchased by its customers. They soon estabished a major presence in the lhign mp product line and the more customized flow controler ine Wikerson's production process started with the purchase of semi-finished cmponents from several supplers. It machined these parts to the requred tolerances and assembled them in the any's modern manufacturing facity. The same equipment and labor were used for all three croduct lines, and production runs were scheduled to match customer shipping requrements. Sales Direct Labor Expense Direct Materials Expense $2152,500 271,250 458,000 Wilkers Exhib Nlke Gomp Operating Ra March 100% Machine-related expenses Setup labor Receiving and production control $336,000 40,000 150,000 Packaging and shipping 806,000 617,250 559,650 $57,600 29% Gross Margin 3% ource: Reprinted by permission of Harvard Business School minht eo01 by the President and Fellows of Harvard College mthar than to Mustrate eithen Wilkerson Company 25 case Wilkerson Company obert S. Kaplan Rabert Parker reeident of the Wilkerson Compeny, was decussang operaling results in the Peggy Kright, his controler, and John Soott, his manufacturing mansger. tre atost month with omnnn the three was taking place in an atmosphere tinged with apprehension becavas reelor had been reducing pices on pumps, Wikerson's product, Parker had soen no aternatve but to match the reduced prices to But the price cuts had led to decining compery profts, especialy in the pump a mmary operating results for the previous month, March 2000, are shown in Wikerson Parkespum wers a commodity mantan volume ine and for Exibits T and 2) 2kerso n supplied products to manufacturers of water purfcation equipment. The compary iated with a unique design for vaves that it coud produce to tolerances that were beter n the industry. Parker quicky established a loyal customer base because of the high f its mnufactured vaves. He and Scott realized that Wikerson's exdsting abor skils and inng equipment could also be used to produce pumps and fow controlers, products that also purchased by its customers. They soon estabished a major presence in the lhign mp product line and the more customized flow controler ine Wikerson's production process started with the purchase of semi-finished cmponents from several supplers. It machined these parts to the requred tolerances and assembled them in the any's modern manufacturing facity. The same equipment and labor were used for all three croduct lines, and production runs were scheduled to match customer shipping requrements. Sales Direct Labor Expense Direct Materials Expense $2152,500 271,250 458,000 Wilkers Exhib Nlke Gomp Operating Ra March 100% Machine-related expenses Setup labor Receiving and production control $336,000 40,000 150,000 Packaging and shipping 806,000 617,250 559,650 $57,600 29% Gross Margin 3% ource: Reprinted by permission of Harvard Business School minht eo01 by the President and Fellows of Harvard College mthar than to Mustrate eithen