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C006 Retail chain account 006 Retail chain

Revenue3,556,137
Direct margin1,037,432
Activity cost593,153
ABC profit444,280 (12.5%)
Traditional profit-29,954

hidden winner Traditional costing assigns 1,067,387 of overhead from 38,164 labour hours; ABC assigns 593,153.

Profit waterfall

01,000,0002,000,0003,000,0004,000,000 Revenue: 3,556,137 3,556,137 RevenueDirect cost: -2,518,705 -2,518,705 Direct costDirect margin: 1,037,432 1,037,432 Direct marginMachine run: -163,573 -163,573 Machine runHand assembly: -116,673 -116,673 Hand assemblySetups: -105,322 -105,322 SetupsQuality inspection: -90,851 -90,851 Quality inspectionPallet handling: -71,311 -71,311 Pallet handlingEngineering changes: -16,740 -16,740 Engineering changesOther activities: -28,682 -28,682 Other activitiesProfit: 444,280 444,280 Profit

Activity costs

ActivityCostShare
Machine run163,57328%
Hand assembly116,67320%
Setups105,32218%
Quality inspection90,85115%
Pallet handling71,31112%
Engineering changes16,7403%
Custom finishing14,4982%
Delivery5,5881%
Order processing3,8591%
Customer support3,4461%
Credit and collections9900%
Returns handling3020%