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C002 Retail chain account 002 Retail chain

Revenue482,833
Direct margin147,604
Activity cost87,405
ABC profit60,200 (12.5%)
Traditional profit17,834

over-charged Traditional costing assigns 129,770 of overhead from 4,640 labour hours; ABC assigns 87,405.

Profit waterfall

0100,000200,000300,000400,000500,000 Revenue: 482,833 482,833 RevenueDirect cost: -335,229 -335,229 Direct costDirect margin: 147,604 147,604 Direct marginMachine run: -22,593 -22,593 Machine runSetups: -14,961 -14,961 SetupsHand assembly: -14,185 -14,185 Hand assemblyQuality inspection: -12,303 -12,303 Quality inspectionPallet handling: -9,249 -9,249 Pallet handlingCustomer support: -4,120 -4,120 Customer supportOther activities: -9,993 -9,993 Other activitiesProfit: 60,200 60,200 Profit

Activity costs

ActivityCostShare
Machine run22,59326%
Setups14,96117%
Hand assembly14,18516%
Quality inspection12,30314%
Pallet handling9,24911%
Customer support4,1205%
Custom finishing3,7814%
Delivery2,5093%
Engineering changes1,6082%
Order processing1,4272%
Credit and collections3660%
Returns handling3020%