Wilkerson Case Study Analysis

1. 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?
2. What factors, broadly speaking and not restricted to the case of Wilkerson, cause any differences between costs and profitability between traditional and ABC systems?
3. 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?