WILKERSON assignment questions

Part 1: Create a activity-based cost model using the information from the case. Derive and report estimates of the cost and profitability of each of Wilkerson's three product lines for the product line and for each unit of product produced.

Part 2:How does using activity-based costing rather traditional costing change reported costs and profitability at Wilkerson?

Part 3:What assumptions does your activity-based costing system depend on? How reliable are your cost estimates? What other approaches to allocating costs, including different ways of doing activity-based costing, could you have considered using? Why might you want to consider using these?

Part 4:What factors, broadly speaking and not restricted to the case of Wilkerson, cause any differences between costs and profitability between traditional and ABC systems?

Part 5:Suppose that Wilkerson uses capacity rather than actual levels of production for product costing. Now what difference does the activity-based costing approach have on reported costs and profitability? Should Wilkerson use actual activity levels or capacity to calculate activity-based costs?