costalloc

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P009 Classic Chair 2

Revenue746,206
Direct margin248,426
Activity cost106,777
ABC profit141,648 (19.0%)
Traditional profit48,407

over-charged Traditional costing assigns 200,019 of overhead from 7,152 labour hours; ABC assigns 106,777.

Profit waterfall

0200,000400,000600,000800,000 Revenue: 746,206 746,206 RevenueDirect cost: -497,780 -497,780 Direct costDirect margin: 248,426 248,426 Direct marginMachine run: -43,356 -43,356 Machine runHand assembly: -21,864 -21,864 Hand assemblySetups: -21,449 -21,449 SetupsQuality inspection: -20,108 -20,108 Quality inspectionProfit: 141,648 141,648 Profit

Activity costs

ActivityCostShare
Machine run43,35641%
Hand assembly21,86420%
Setups21,44920%
Quality inspection20,10819%