costalloc

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P001 Classic Chair 1

Revenue795,907
Direct margin247,908
Activity cost72,597
ABC profit175,311 (22.0%)
Traditional profit103,633

over-charged Traditional costing assigns 144,275 of overhead from 5,158 labour hours; ABC assigns 72,597.

Profit waterfall

0200,000400,000600,000800,000 Revenue: 795,907 795,907 RevenueDirect cost: -547,999 -547,999 Direct costDirect margin: 247,908 247,908 Direct marginMachine run: -29,523 -29,523 Machine runHand assembly: -15,770 -15,770 Hand assemblyQuality inspection: -13,157 -13,157 Quality inspectionSetups: -12,675 -12,675 SetupsEngineering changes: -1,473 -1,473 Engineering changesProfit: 175,311 175,311 Profit

Activity costs

ActivityCostShare
Machine run29,52341%
Hand assembly15,77022%
Quality inspection13,15718%
Setups12,67517%
Engineering changes1,4732%