Wilkerson Company HBS Case Assignment First, read the Wilkerson case carefully Then, think about the following questions (on your own, and in discussion with your team members, if any) What is the competitive situation faced by Wilkerson for each of its three products Given some of the apparent problems with Wilkersons cost system, should executives abandon the idea of assigning overhead to products altogether, by adopting a contribution margin approach with its products, instead Hint a contribution margin approach measuring product profitability as simply price less direct materials and direct labor costs, and treating all manufacturing overheads as period expenses How does Wilkersons existing cost system work DoesitseemtoyouthatWilkersonmightbethekindofcompanythatcanbenefit from switching to an activity based costing (ABC) system What would an ABC costing system for Wilkerson look like Hint Develop and chart out the ABC 1 exhibit for Wilkerson Testyourintuitionwiththisoptionalquestion Beforedoinganycalculations,simply by reviewing your ABC 1 exhibit, can you predict which products will be most affected by using the ABC costing system Whataretherevisedcostandprofitabilityofeachofthethreeproducts,usingthe ABC costing system Hint Develop and complete the ABC 2 exhibit for Wilkerson WhatdotheABC basedcostandprofitabilitycalculationsrevealabouteachofthe products Based on your analyses with the ABC costing system, what actions might Wilkersons management team consider, to improve the companys profitability What are the limitations of the cost estimates you prepared in your answer to question 7 What other information or analysis would you want, for better cost and profitability estimates Wilkerson has, so far, been compensating salespersons with commissions based on gross sales volume less returns Is a better way to calculate commissions Prepare a write up with succinct answers to each of these questions You may formulate your answers as paragraphs or as bullet points, as long as you convey the necessary information Please restrict your write up to 4 sides of letter paper, typed and single spaced, at the maximum To this, please attach Exhibits ABC 1 and ABC 2, and any other exhibits you may want to add to convey your points All answers and exhibits must be neatly typed and formatted in a readable way

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 17, 2024

Wilkerson Company HBS Case Assignment First, read the Wilkerson case carefully. Then, think about the following questions (on your own, and in discussion with your

Wilkerson Company HBS Case Assignment

First, read the Wilkerson case carefully. Then, think about the following questions (on your own, and in discussion with your team-members, if any):

What is the competitive situation faced by Wilkerson for each of its three products?
Given some of the apparent problems with Wilkersons cost system, should executives abandon the idea of assigning overhead to products altogether, by adopting a contribution margin approach with its products, instead?

Hint: a contribution margin approach = measuring product profitability as simply price less direct materials and direct labor costs, and treating all manufacturing overheads as period expenses.
How does Wilkersons existing cost system work?
DoesitseemtoyouthatWilkersonmightbethekindofcompanythatcanbenefit from switching to an activity-based costing (ABC) system?
What would an ABC costing system for Wilkerson look like?Hint: Develop and chart out the ABC.1 exhibit for Wilkerson.
Testyourintuitionwiththisoptionalquestion:Beforedoinganycalculations,simply by reviewing your ABC.1 exhibit, can you predict which products will be most affected by using the ABC costing system?
Whataretherevisedcostandprofitabilityofeachofthethreeproducts,usingthe ABC costing system?

Hint: Develop and complete the ABC.2 exhibit for Wilkerson.
WhatdotheABC-basedcostandprofitabilitycalculationsrevealabouteachofthe

products?
Based on your analyses with the ABC costing system, what actions might Wilkersons management team consider, to improve the companys profitability?
What are the limitations of the cost estimates you prepared in your answer to question 7? What other information or analysis would you want, for better cost and profitability estimates?
Wilkerson has, so far, been compensating salespersons with commissions based on gross sales volume less returns. Is a better way to calculate commissions?

Prepare a write-up with succinct answers to each of these questions. You may formulate your answers as paragraphs or as bullet points, as long as you convey the necessary information. Please restrict your write-up to 4 sides of letter paper, typed and single-spaced, at the maximum. To this, please attach Exhibits ABC.1 and ABC.2, and any other exhibits you may want to add to convey your points. All answers and exhibits must be neatly typed and formatted in a readable way.