1. Using the Activity Based Cost analysis for Wilkerson developed in Presentation 1 of this week, work to discover actions these data suggest that the Marketing Department could undertake to improve Wilkerson?s financial performance by solving problems or leveraging opportunities evident at Wilkerson Company.

2. Develop a Marketing Department action plan based on your analysis in #1, above. Which actions identified above do you recommend that the Marketing Department undertake? Why?

Will your action plan impact any other departments at Wilkerson? If so, how will you manage that?

3. What are the financial implications of your plan? Specifically, what is the impact of your action plan on Wilkerson?s bottom line?

Total Manufacturing Overhead ($806,000) Total Manufacturing Overhead ($806,000) 300% DL$ Products Direct Material $458,000 Total Manufacturing Overhead ($806,000) 300% DL$ Products Direct Labor $271,250 Summary - Per Unit Valves Price Std Cost (DL) GM% Pumps Flow Controllers $86.00 $87.00 $105.00 56.00 70.00 62.00 35% 20% 41% Total Manufacturing Overhead ($806,000) Total Manufacturing Overhead ($806,000) Total Manufacturing Overhead ($806,000) Machine Components Setup Machines Receive Components & Production Control Packing & Shipping Engineering Total Manufacturing Overhead ($806,000) Machine Components $/MH Setup Machines $/Ru n Receive Components & Production Control $/Ru n Products Packing & Shipping Engineering $/Shipmen $/Eng Hr t Total Manufacturing Overhead ($806,000) Direct Material $458,000 Machine Components $/MH Setup Machines $/Ru n Receive Components & Production Control $/Ru n Products Direct Labor $271,250 Packing & Shipping Engineering $/Shipmen $/Eng Hr t ABC Overhead Activity Total Cost Cost Driver Rate # Transactions Valves Cost 11,200 M Hr. $30/M Hr. x 3,750 $112,500 40,000 160 P.R. $250/P.R. x 10 2,500 Rec + PC 180,000 160 P.R. $1,125/P.R. x 10 11,250 Engineerin g 100,000 1,250 E Hrs. $80/E. Hr. x 250 20,000 Pack & Ship 150,000 300 Ship. $500/Ship. x 10 Machine $336,00 0 Setup Total 5,000 $151,250 ABC Manufacturing Overhead Costs Total Valves Pumps $112,500 $187,500 $36,000 2,500 12,500 25,000 Receiving and Production Control 11,250 56,250 112,500 Engineering 20,000 30,000 50,000 5,000 35,000 110,000 $151,250 $321,250 $333,500 Machine Expenses Setup Labor Package & Ship ABC Manufacturing Overhead Flow Controllers ABC Manufacturing Overhead Costs - Per Unit Valves Machine Expenses Pumps Flow Controllers $15.00 $15.00 $9.00 Setup Labor 0.33 1.00 6.25 Receiving and Production Control 1.50 4.50 28.13 Engineering 2.67 2.40 12.50 Package & Ship 0.67 2.80 27.50 $20.17 $25.70 $83.38 ABC Manufacturing Overhead Total ABC Cost - Per Unit Valves Direct Labor Pumps Flow Controllers $10.00 $12.50 $10.00 Direct Materials 16.00 20.00 22.00 ABC Overhead 20.17 25.70 83.38 $46.17 $58.20 $115.38 Total Summary - Per Unit Valves Price Std Cost (DL) GM% ABC Cost GM% Pumps Flow Controllers $86.00 $87.00 $105.00 56.00 70.00 62.00 35% 20% 41% 46.17 58.20 115.38 46% 33% (10%)