Wilkerson Company Introduction Wilkerson Company is in the business of manufacturing valves, pumps, flow controllers etc. Severe industry wise price cuts in the pumps business, which is Wilkerson s major product line, has badly affected the company s margins (Gross Margin of 19.5% as against a planned gross margin of 35%). On the other hand the flow controllers division was performing above the expected profits (yielding a Gross Margin of 41%, a value higher than 35% estimated). Wilkerson needs
Words: 1834 - Pages: 8
What is the competitive situation faced by Wilkerson? Wilkerson’s competitors have cut prices on their pumps, in order to maintain market share, Wilkerson also cut the price of their pumps. This dropped Wilkerson’s GM by about 15%. At the same time, Wilkerson was able to increase the price of their flow controllers by 10% without a drop in demand. The manufacturing manager now feels that the competitors’ valves are of equal quality as that of Wilkerson. Currently, the competitors have not
Words: 263 - Pages: 2
1)Existing cost system Products | Units | Direct Labor | Direct Material | Total Direct Costs | Overhead Costs | Total Costs | Valves | 7500 | 75000 | 120000 | 195000 | 225000 | 420000 | Pumps | 12500 | 156250 | 250000 | 406250 | 468750 | 875000 | Flow Controllers | 4000 | 40000 | 88000 | 128000 | 120000 | 248000 | All overheads allocated in proportion to direct labour cost. This is not an accurate reflection of the true overhead costs of each product type. 2)ABC SYSTEM Cost per unit
Words: 323 - Pages: 2
Todd Schueler Week 2 Assignment 1: Wilkerson Company Case Analysis Questions 3, 4, and 6 Saturday, April 05, 2014 3.) The estimated product costs for valves, pumps, and flow controllers using ABC for overhead activities (primarily Ex. 1 & 4) and direct cost data from the Exhibits are: * The Valves total product variable costs are $195,000, the Valves total fixed costs are $149,990.31 and the Activity Based Costing Valve cost per unit it $46. * The Pumps total product variable
Words: 1063 - Pages: 5
Wilkerson Company Questions for Class Discussion 1. What is the competitive situation faced by Wilkerson? Wilkerson’s competitors have cut prices on their pumps, in order to maintain market share, Wilkerson also cut the price of their pumps. This dropped Wilkerson’s GM by about 15%. At the same time, Wilkerson was able to increase the price of their flow controllers by 10% without a drop in demand. The manufacturing manager now feels that the competitors’ valves are of equal quality as
Words: 960 - Pages: 4
Aussie pies Anna Amphlett and Andrew Ferris has decided to startup a new business in Seattle, U.S.A under the name of Aussie Pies Inc. after their visit to Australia; where they discovered the meat pies, the national snack food of Australia and interested in starting up a business in U.S to produce and sell similar meat pies, The couple has decided to apply for a loan through a contact to establish a new business. Even though bank has tentatively agreed to provide the loan up to one million
Words: 8670 - Pages: 35
Accounting 860 Case 2: Wilkerson Co. Group 6 Julia Boggs Scott Drake Chengyuan Wang Yichun Wang October 16, 2013 1. What is the competitive situation faced by Wilkerson? Wilkerson has three products and they each faces different competitive situations. a. The pump market is highly competitive and Wilkerson has to match current market prices to keep its current market share. b. Wilkerson is a market leader in the valve industry and the market is mature
Words: 1464 - Pages: 6
Delano – Vincent Magré – Arnaud Orhan – Arnaud Salvisberg – Annabelle Wephre Gaël Delano – Vincent Magré – Arnaud Orhan – Arnaud Salvisberg – Annabelle Wephre STUDY CASE : WILKERSON COMPANY STUDY CASE : WILKERSON COMPANY Table des matières What is the competitive situation faced by Wilkerson ? 3 Given some of the apparent problems with Wilkerson’s cost system, should executives abandon overhead assignment to products entirely by adopting a contribution margin approach in which
Words: 1500 - Pages: 6
AUGUST S, 2003 ROBERT S. KAPL AN Wilkerson Cotnpany The decline in our profits has become intolerable. The severe p rice cutting in pumps has dropped ou r pre-tax margin to less than 3%, far below our historicallO margins. Fortunately, % our competitors are overlooking the opportunities for profit in flow controllers. Our recent 10% price increase in tha t line has been implemented without losing any business. Robert Parker, presiden t of the Wilkerson Company, was discussing operating results
Words: 1668 - Pages: 7
Accounting and Control Spring 2007 Prof. Mozaffar Khan MIT Sloan School of Management Wilkerson Why is Wilkerson examining its costs now (what is the catalyst)? Its competitive environment: Declining overall profitability, price pressures on one product line, but apparent price inelasticity of demand for other product lines. How many overhead cost pools does Wilkerson currently have? One. Allocation base is direct labor dollars. Rate is 300%. Why
Words: 1447 - Pages: 6
