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P010 Classic Table 2

Revenue1,451,065
Direct margin427,664
Activity cost200,712
ABC profit226,952 (15.6%)
Traditional profit64,174

over-charged Traditional costing assigns 363,490 of overhead from 12,996 labour hours; ABC assigns 200,712.

Profit waterfall

0500,0001,000,0001,500,000 Revenue: 1,451,065 1,451,065 RevenueDirect cost: -1,023,401 -1,023,401 Direct costDirect margin: 427,664 427,664 Direct marginMachine run: -91,851 -91,851 Machine runHand assembly: -39,732 -39,732 Hand assemblyQuality inspection: -34,507 -34,507 Quality inspectionSetups: -33,149 -33,149 SetupsEngineering changes: -1,473 -1,473 Engineering changesProfit: 226,952 226,952 Profit

Activity costs

ActivityCostShare
Machine run91,85146%
Hand assembly39,73220%
Quality inspection34,50717%
Setups33,14917%
Engineering changes1,4731%