1. Provide your best estimate of the cost and profitability of Wilkerson’s three product lines using: a. Wilkerson’s existing cost system – Ø Valves – Cost: $56/unit, Gross Margin: $30/unit, Gross Margin %: 35% Ø Pumps – Cost: $70/unit, Gross Margin: $17/unit, Gross Margin %: 20% Ø Flow Controller –
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ACCT5620W Contemporary Management Accounting Wilkerson Case Report * Contents Executive Summary 2 Competitive situation faced by Wilkerson 2 Wilkerson’s Existing Costing System Limitation & Possibility of Activity Based Costing 4 Cost Driver and rates under Activity-based Costing 6 Implication and Recommendations 8 Valves 8 Pumps 9 Flow controllers 9 Executive Summary Wilkerson traditional costing system seems to be too simplified. Using a single allocation base
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Wilkerson Company Περίληψη Το case study αναφέρεται στην κατασκευαστική εταιρεία του Wilkerson, η οποία κατασκευάζει 3 διαφορετικά προϊόντα, valves, pumps και flow controllers. Οι ανταγωνιστές της εταιρείας έχουν μειώσει τις τιμές στα pumps και ο Wilkerson αναγκάστηκε να μειώσει και τις δικές του τιμές για να διατηρήσει το μερίδιο του στην αγορά. Λόγω αυτού όμως η εταιρεία είχε μειωμένα κέρδη. Ο μοναδικός σχεδιασμός και η ψηλή ποιότητα των valves, οδήγησαν στη δημιουργία ενός σταθερού πελατολογίου
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Management Accounting for Multinational Companies Solution to the Wilkerson Case Igor Baranov Executive Summary Taking into account the difference among product and high proportion of overheads, Wilkerson should abandon its existing cost system and move to activity-‐based costing. The profitability analysis indicates that the company earns healthy margins on pumps and valves. However, the margin of flow controllers
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Section 1, Group 11 Group Members: Alex Schaefer, Shilpa Sitaram and Tushar Bhandari Assignment #1: Wilkerson Company Case 1) The existing cost system allocates overhead based on each product’s proportion of direct labor costs. The rate per unit of direct labor cost is 300% for all product groups. This results in the following cost breakdowns: 2) When you use an activity based cost model the allocations are as follows: Product Profitablity analysis | | | | | Valves | Pumps | Flow
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Case write-up: Cost Management Wilkerson Company The problem – Current method of volume based costing Wilkerson Company is engaged in the manufacturing of valves, pumps and flow controllers. Its major problem is the very low pre-tax operating income of 3%. This problem can be majorly attributed to the pricing policy which the company follows. Because of the pricing policy, the company is able to earn fairly good margins on valves and flow controllers but is lagging way behind the target in the
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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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CASE REPORT DATE: 03/01/2015 GROUP 5: Oliver Principe, Jorge Colorado, Manwinder Singh, Amanpreet Mann SUBMITTED TO: Prof. Ting He CASE: Wilkerson Company Introduction Wilkerson Company is in the business of manufacturing valves, pumps and flow controllers. Wilkerson is currently faced with declining profit margins relative to industry competitors. Severe industry wise price cuts in the pump business, which is Wilkerson’s major product line, has badly affected the company’s margins (Gross
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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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