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C076 Contract account 076 Contract

Revenue149,986
Direct margin41,332
Activity cost29,667
ABC profit11,665 (7.8%)
Traditional profit2,185

over-charged Traditional costing assigns 39,147 of overhead from 1,400 labour hours; ABC assigns 29,667.

Profit waterfall

050,000100,000150,000 Revenue: 149,986 149,986 RevenueDirect cost: -108,655 -108,655 Direct costDirect margin: 41,332 41,332 Direct marginMachine run: -7,209 -7,209 Machine runSetups: -5,155 -5,155 SetupsHand assembly: -4,279 -4,279 Hand assemblyQuality inspection: -3,953 -3,953 Quality inspectionPallet handling: -2,756 -2,756 Pallet handlingCustomer support: -2,023 -2,023 Customer supportOther activities: -4,292 -4,292 Other activitiesProfit: 11,665 11,665 Profit

Activity costs

ActivityCostShare
Machine run7,20924%
Setups5,15517%
Hand assembly4,27914%
Quality inspection3,95313%
Pallet handling2,7569%
Customer support2,0237%
Delivery1,3685%
Custom finishing1,3355%
Engineering changes7663%
Order processing6872%
Credit and collections1360%
Returns handling00%