Business Accounting: Wilkerson Company - ABC Costing and Strategy

This case study analyzes the Wilkerson Company's financial situation, focusing on the application of Activity-Based Costing (ABC) to address issues of declining profitability in a competitive market. The company produces valves, pumps, and flow controllers, facing challenges such as baffled pricing and intense competition. The analysis examines the allocation of overhead costs using ABC, considering factors like machine hours, production runs, and shipments. The study calculates the total costs and gross margins for each product line, recommending that the company focus on the production of valves or flow controllers based on the insights from the ABC costing system. The document concludes with references to relevant academic articles supporting the analysis.