Single

Wilkerson Company
ACCT 801
Padmini Paturi

Wilkerson Company



1. According to Exhibit 1 of the case, Wilkerson Company has a gross margin of $617,250 when the Traditional Cost System is used.   Also, according to Exhibit 2 of the case, using the Traditional Cost System, valves have a 34.9% gross margin, pumps have a 19.5% gross margin, and flow controllers have a 41.0% gross margin.   Table 1 on the next page shows the cost pool/cost driver information for an Activity Based Costing (ABC) system for Wilkerson.   [It also is worksheet #1 – ABC of the accompanying Excel worksheet.]   Using this information, calculate the gross margin % for each product using ABC.   (You may want to use worksheet #2 – Three Products from the accompanying Excel worksheet as a starting point.)




|                                                    |Valves         |Pumps           |Flow Controllers       |Total                     |
|                                                    |                |                |                        |                          |
|Production                                         |         7,500   |         12,500   |                       |                          |
|                                                   |               |                 |4,000                   |                         |
|                                                    |                |                |                        |                          |
|Direct Labor Expense                               |$75,000         |$156,250         |$40,000                 | $           271,250     |
|Material Expenses                                   |$120,000       |$250,000         |$88,000                 | $           458,000     |
|Manufacturing Overhead                             |                |                |                        |                          |
|Machines Expenses                                   |$112,500       |$187,500         |$36,000...