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C066 Contract account 066 Contract

Revenue206,920
Direct margin58,478
Activity cost45,882
ABC profit12,596 (6.1%)
Traditional profit-8,397

hidden winner Traditional costing assigns 66,876 of overhead from 2,391 labour hours; ABC assigns 45,882.

Profit waterfall

050,000100,000150,000200,000250,000 Revenue: 206,920 206,920 RevenueDirect cost: -148,441 -148,441 Direct costDirect margin: 58,478 58,478 Direct marginMachine run: -10,738 -10,738 Machine runSetups: -7,984 -7,984 SetupsHand assembly: -7,310 -7,310 Hand assemblyQuality inspection: -5,838 -5,838 Quality inspectionPallet handling: -3,810 -3,810 Pallet handlingCustom finishing: -2,807 -2,807 Custom finishingOther activities: -7,395 -7,395 Other activitiesProfit: 12,596 12,596 Profit

Activity costs

ActivityCostShare
Machine run10,73823%
Setups7,98417%
Hand assembly7,31016%
Quality inspection5,83813%
Pallet handling3,8108%
Custom finishing2,8076%
Customer support2,1735%
Delivery2,1675%
Engineering changes1,4163%
Order processing1,2163%
Returns handling3021%
Credit and collections1220%