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Wilkerson Company HBS Case Assignment
First, read the Wilkerson case carefully. Then, think about the
following questions (on your own, and in discussion with your
team-members, if any):
What is the competitive situation faced by Wilkerson for each of
its three products?
Given some of the apparent problems with Wilkersonâ€™s cost
system, should executives abandon the idea of assigning overhead to
products altogether, by adopting a contribution margin approach
with its products, instead?
Hint: a contribution margin approach = measuring product
profitability as simply price less direct materials and direct
labor costs, and treating all manufacturing overheads as period
How does Wilkersonâ€™s existing cost system work?
from switching to an activity-based costing (ABC) system?
What would an ABC costing system for Wilkerson look like?Hint:
Develop and chart out the ABC.1 exhibit for Wilkerson.
by reviewing your ABC.1 exhibit, can you predict which products
will be most affected by using the ABC costing system?
ABC costing system?
Hint: Develop and complete the ABC.2 exhibit for Wilkerson.
Based on your analyses with the ABC costing system, what actions
might Wilkersonâ€™s management team consider, to improve the
What are the limitations of the cost estimates you prepared in
your answer to question 7? What other information or analysis would
you want, for better cost and profitability estimates?
Wilkerson has, so far, been compensating salespersons with
commissions based on gross sales volume less returns. Is a better
way to calculate commissions?
Prepare a write-up with succinct answers to each of these
questions. You may formulate your answers as paragraphs or as
bullet points, as long as you convey the necessary information.
Please restrict your write-up to 4 sides of letter paper, typed and
single-spaced, at the maximum. To this, please attach Exhibits
ABC.1 and ABC.2, and any other exhibits you may want to add to
convey your points. All answers and exhibits must be neatly typed
and formatted in a readable way.