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P006 Classic Bed 1

Revenue1,425,076
Direct margin413,860
Activity cost168,295
ABC profit245,565 (17.2%)
Traditional profit45,810

over-charged Traditional costing assigns 368,049 of overhead from 13,159 labour hours; ABC assigns 168,295.

Profit waterfall

0500,0001,000,0001,500,000 Revenue: 1,425,076 1,425,076 RevenueDirect cost: -1,011,217 -1,011,217 Direct costDirect margin: 413,860 413,860 Direct marginMachine run: -62,854 -62,854 Machine runHand assembly: -40,230 -40,230 Hand assemblyQuality inspection: -33,017 -33,017 Quality inspectionSetups: -29,249 -29,249 SetupsEngineering changes: -2,945 -2,945 Engineering changesProfit: 245,565 245,565 Profit

Activity costs

ActivityCostShare
Machine run62,85437%
Hand assembly40,23024%
Quality inspection33,01720%
Setups29,24917%
Engineering changes2,9452%