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C080 Contract account 080 Contract

Revenue390,967
Direct margin108,729
Activity cost71,158
ABC profit37,571 (9.6%)
Traditional profit-18,409

hidden winner Traditional costing assigns 127,137 of overhead from 4,546 labour hours; ABC assigns 71,158.

Profit waterfall

0100,000200,000300,000400,000 Revenue: 390,967 390,967 RevenueDirect cost: -282,238 -282,238 Direct costDirect margin: 108,729 108,729 Direct marginMachine run: -18,493 -18,493 Machine runHand assembly: -13,897 -13,897 Hand assemblySetups: -12,527 -12,527 SetupsQuality inspection: -10,519 -10,519 Quality inspectionPallet handling: -8,027 -8,027 Pallet handlingCustom finishing: -1,899 -1,899 Custom finishingOther activities: -5,795 -5,795 Other activitiesProfit: 37,571 37,571 Profit

Activity costs

ActivityCostShare
Machine run18,49326%
Hand assembly13,89720%
Setups12,52718%
Quality inspection10,51915%
Pallet handling8,02711%
Custom finishing1,8993%
Delivery1,8253%
Customer support1,7232%
Order processing1,0041%
Engineering changes8201%
Returns handling3020%
Credit and collections1220%