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C009 Retail chain account 009 Retail chain

Revenue346,313
Direct margin117,641
Activity cost70,487
ABC profit47,154 (13.6%)
Traditional profit16,538

over-charged Traditional costing assigns 101,103 of overhead from 3,615 labour hours; ABC assigns 70,487.

Profit waterfall

0100,000200,000300,000400,000 Revenue: 346,313 346,313 RevenueDirect cost: -228,672 -228,672 Direct costDirect margin: 117,641 117,641 Direct marginMachine run: -17,227 -17,227 Machine runSetups: -11,847 -11,847 SetupsHand assembly: -11,051 -11,051 Hand assemblyQuality inspection: -9,202 -9,202 Quality inspectionPallet handling: -6,661 -6,661 Pallet handlingDelivery: -3,649 -3,649 DeliveryOther activities: -10,850 -10,850 Other activitiesProfit: 47,154 47,154 Profit

Activity costs

ActivityCostShare
Machine run17,22724%
Setups11,84717%
Hand assembly11,05116%
Quality inspection9,20213%
Pallet handling6,6619%
Delivery3,6495%
Custom finishing3,4595%
Customer support3,0724%
Order processing2,3263%
Engineering changes1,0952%
Credit and collections5971%
Returns handling3020%