AUGUST 5, 2003 ROBERT S. KAPLAN Wilkerson Company The decline in our profits has become intolerable. The severe price cutting in pumps has dropped our pre-tax margin to less than 3%, far below our historical 10% margins. Fortunately, our competitors are overlooking the opportunities for profit in flow controllers. Our recent 10% price increase in that line has been implemented without losing any business. Robert Parker, president of the Wilkerson Company, was discussing operating results
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R Marcin Wilkerson Company Case 1. What is Wilkerson’s competitive situation? What is the problem? Wilkerson’s competitive situation is with the other competitors that are making the same pumps lowered the prices so Wilkerson had to do the same thing. The problem with that is now Wilkerson is losing a gross profit of sales at 20%. Wilkerson will now have to think about its overhead costs to stop losing profit at the new price they are selling their pumps. 2. Should executives abandon
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ROBERT S. KAPLAN Wilkerson Company The decline in our profits has become intolerable. The severe price cutting in pumps has dropped our pre-tax margin to less than 3%, far below our historical 10% margins. Fortunately, our competitors are overlooking the opportunities for profit in flow controllers. Our recent 10% price increase in that line has been implemented without losing any business. Robert Parker, president of the Wilkerson Company, was discussing operating results in the latest
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Case “Wilkerson Company” • The case is available for purchase at the NYUBookstore as a digital coursepack (in store or online at http://www.bookstores.nyu.edu). • Form your own group of at most 4 students (including yourself). Each group submits one solution. Show your calculations for problems 2-5. 1. What is the competitive situation faced by Wilkerson? 2. What is the structure of the existing (traditional) costing system? Evaluate the features of this system. Should Wilkerson abandon its
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Case “Wilkerson Company” • The case is available for purchase at the NYUBookstore as a digital coursepack (in store or online at http://www.bookstores.nyu.edu). • Form your own group of at most 4 students (including yourself). Each group submits one solution. Show your calculations for problems 2-5. 1. What is the competitive situation faced by Wilkerson? 2. What is the structure of the existing (traditional) costing system? Evaluate the features of this system. Should Wilkerson abandon its
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1. Using the information in the case, design an activity-based costing system and estimate product costs and gross margin percentages for valves, pumps and flow controllers. Justify your reasons for your ABC system design and computations. As per the ABC costing system, the 5 overhead cost drivers that can be identified are: A. Product Sustaining Activity Costs (i) Engineering Costs B. Batch Activity Costs (i) Receiving & Production Costs (ii) Setup Labor Costs (iii) Packaging & Shipping
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Wilkerson Co. Case Group 6 #1) Wilkerson is dealing with many different factors when it comes to the competition in their industry. First, the main issue in regards to competition is the fact that all the competitors are cutting the price on their pumps in order to gain market share and creating a price war within the industry. This is something that happens often in very competitive industries and usually the largest companies survive such tactics. This tactic is good for the consumers in the
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Wilkerson Company manufactures water purification equipment with unique high quality valve design. Recently, the company has experienced deterioration in pre-tax margins to below 3%, far below the historical 10% margins and sales has fallen bellow 20% due to competitive situation that is driving prices down on Pumps (commodity products). These products are produced in high volumes for a market with high price competition. Wilkerson is a quality leader, but should be prepared to compete on price.
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environment. At a minimum, include any barriers to entry, industry maturity, the specific market and production complexity for each product, and marketing concerns. Wilkerson is a manufacturing company specializing in manufacturing components for water purification systems; the company makes valves, pumps, and flow controllers. Wilkerson is a supplier to companies that actually manufacture the water purification equipment. The relevant officers of the organization are: * Robert Parker, President
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Wilkerson Company Analysis June 30th, 2014 1. If Wilkerson were to cut prices, based on contribution margin, to just cover short-term variable costs, what consequences could it experience? Contribution margin-based pricing attempts to maximize profit generated from the sale of each unit of product by maximizing the difference between that product’s price and variable costs, or contribution margin. Under this pricing strategy, only variable costs, which increase with a higher sales volume and
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