Wilkerson Co Case Solution

Posted by John Smith on May 19th, 2018

The leader of Wilkerson, confronted with decreasing profits, is battling to know why the organization is experiencing severe cost competition on a single products while in a position to raise prices without competitive response on another products. The controller proposes that the organization develop a task-based cost model to know better the various demands that every products makes around the organization's indirect and support assets. A rewritten form of an early on case.

Excel Calculations

Operating Results

Product Profitability Analysis

Product Data

Monthy Production and Operating Statistics

Activity Based Costing

Acivity Cost pool and Measures

Acivity Cost pool and Cost Driver Rate

Unit Cost Of Product Line

Operating Results

Product wise Operating results

Questions Covered

What is the competitive situation faced by Wilkerson?

Given some of the apparent problems with Wilkerson's cost system, should executives abandon overhead assignment to producer entirely by adopting a contribution margin approach in which manufacturing overhead is treated as a period expense? Why or why not?

How does Wilkerson's existing cost system operate? Develop a diagram to show how costs flow from factory expense accounts to products.

Develop and diagram an activity -based cost model using the information in the case. Provide your best estimates about the cost and profitability of Wilkerson's three product lines. What difference does your cost assignment have on reported product costs and profitability? What causes any shifts in cost and profitability?

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John Smith

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John Smith
Joined: June 21st, 2014
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