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Wilkerson Case

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  • March 2013
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AIM 6202 – Wilkerson Company

Everything you need is in the case and in the requirements provided below. I will not provide any interim feedback on this case so please do not send me any preliminary analysis to check whether you are “on track.”

Address the issues/questions provided below in your case report. The format of the write up can be either in the form of detailed answers to each of the questions below or as a comprehensive, smooth-flowing case analysis. No page limits and you can include any number of exhibits. Please submit the case through the ELearning assignment drop box tool. One submission per group is enough.

I have observed in the past that the best reports are from those groups where all the group members work on the entire project and not those that divide up the work by assigning a few questions to each member and cobbling together a report.

Plagiarism of any form will be subject to penalties/sanctions described under the academic code of conduct section in the syllabus.

Issues/Questions:

1.What is the competitive situation faced by Wilkerson?

2. Given some of the apparent problems with Wilkerson’s cost system, should executives abandon overhead assignment to products entirely by adopting a contribution margin approach in which manufacturing overhead is treated as a period expense? Why or why not?

3. How does Wilkerson’s existing cost system operate? Develop a diagram to show how costs flow from factory expense accounts to products.

4. Develop and diagram an activity-based cost (ABC) model using the information in the case.

5. Estimate the ABC-based cost and profitability of Wilkerson’s three product lines by estimating the various activity cost driver rates using the manufacturing overhead amount and actual total usage data of the various activity cost drivers in March 2000 provided in Exhibit 4. Why are these costs and profits different from the product costs reported in Exhibit 2? What...