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C020 Retail chain account 020 Retail chain

Revenue1,113,374
Direct margin357,567
Activity cost170,799
ABC profit186,768 (16.8%)
Traditional profit106,591

over-charged Traditional costing assigns 250,977 of overhead from 8,974 labour hours; ABC assigns 170,799.

Profit waterfall

0250,000500,000750,0001,000,0001,250,000 Revenue: 1,113,374 1,113,374 RevenueDirect cost: -755,806 -755,806 Direct costDirect margin: 357,567 357,567 Direct marginMachine run: -41,581 -41,581 Machine runSetups: -31,576 -31,576 SetupsHand assembly: -27,434 -27,434 Hand assemblyQuality inspection: -22,018 -22,018 Quality inspectionPallet handling: -14,401 -14,401 Pallet handlingCustom finishing: -12,162 -12,162 Custom finishingOther activities: -21,626 -21,626 Other activitiesProfit: 186,768 186,768 Profit

Activity costs

ActivityCostShare
Machine run41,58124%
Setups31,57618%
Hand assembly27,43416%
Quality inspection22,01813%
Pallet handling14,4018%
Custom finishing12,1627%
Engineering changes9,7956%
Delivery3,9912%
Customer support3,4462%
Order processing2,5371%
Returns handling1,2061%
Credit and collections6510%