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P005 Classic Shelf 1

Revenue705,993
Direct margin268,295
Activity cost126,676
ABC profit141,619 (20.1%)
Traditional profit-44,935

hidden winner Traditional costing assigns 313,229 of overhead from 11,199 labour hours; ABC assigns 126,676.

Profit waterfall

0200,000400,000600,000800,000 Revenue: 705,993 705,993 RevenueDirect cost: -437,699 -437,699 Direct costDirect margin: 268,295 268,295 Direct marginMachine run: -46,429 -46,429 Machine runHand assembly: -34,239 -34,239 Hand assemblyQuality inspection: -23,584 -23,584 Quality inspectionSetups: -22,424 -22,424 SetupsProfit: 141,619 141,619 Profit

Activity costs

ActivityCostShare
Machine run46,42937%
Hand assembly34,23927%
Quality inspection23,58419%
Setups22,42418%