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P016 Studio Stool 2

Revenue57,991
Direct margin20,145
Activity cost30,014
ABC profit-9,869 (-17.0%)
Traditional profit7,629

hidden loser Traditional costing assigns 12,516 of overhead from 448 labour hours; ABC assigns 30,014.

Profit waterfall

-20,000020,00040,00060,000 Revenue: 57,991 57,991 RevenueDirect cost: -37,846 -37,846 Direct costDirect margin: 20,145 20,145 Direct marginSetups: -11,700 -11,700 SetupsQuality inspection: -5,958 -5,958 Quality inspectionEngineering changes: -5,890 -5,890 Engineering changesCustom finishing: -3,023 -3,023 Custom finishingMachine run: -2,075 -2,075 Machine runHand assembly: -1,368 -1,368 Hand assemblyProfit: -9,869 -9,869 Profit

Activity costs

ActivityCostShare
Setups11,70039%
Quality inspection5,95820%
Engineering changes5,89020%
Custom finishing3,02310%
Machine run2,0757%
Hand assembly1,3685%