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P003 Classic Desk 1

Revenue842,375
Direct margin241,097
Activity cost109,170
ABC profit131,927 (15.7%)
Traditional profit11,326

over-charged Traditional costing assigns 229,772 of overhead from 8,215 labour hours; ABC assigns 109,170.

Profit waterfall

0200,000400,000600,000800,0001,000,000 Revenue: 842,375 842,375 RevenueDirect cost: -601,278 -601,278 Direct costDirect margin: 241,097 241,097 Direct marginMachine run: -29,981 -29,981 Machine runSetups: -29,249 -29,249 SetupsHand assembly: -25,115 -25,115 Hand assemblyQuality inspection: -24,825 -24,825 Quality inspectionProfit: 131,927 131,927 Profit

Activity costs

ActivityCostShare
Machine run29,98127%
Setups29,24927%
Hand assembly25,11523%
Quality inspection24,82523%