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P013 Classic Shelf 2

Revenue789,944
Direct margin264,753
Activity cost102,704
ABC profit162,049 (20.5%)
Traditional profit73,828

over-charged Traditional costing assigns 190,925 of overhead from 6,826 labour hours; ABC assigns 102,704.

Profit waterfall

0200,000400,000600,000800,000 Revenue: 789,944 789,944 RevenueDirect cost: -525,192 -525,192 Direct costDirect margin: 264,753 264,753 Direct marginMachine run: -34,391 -34,391 Machine runSetups: -25,349 -25,349 SetupsQuality inspection: -22,094 -22,094 Quality inspectionHand assembly: -20,870 -20,870 Hand assemblyProfit: 162,049 162,049 Profit

Activity costs

ActivityCostShare
Machine run34,39133%
Setups25,34925%
Quality inspection22,09422%
Hand assembly20,87020%