Sippican Corporation Case Analysis Essay examples

856 Words Mar 21st, 2015 4 Pages
Overview
The review of the financials at Sippican Corporation provided some interesting insights. Due to the apparent issues with the company’s current cost system, executives at Sippican Corp. have some decisions to make regarding the future of the company’s costing system. Appendix A offers a time-driven activity-based costing system approach to Sippican’s financial woes.
Quantitative Summary
Calculations (Appendix A) reveal that utilization of an time-based activity costing system provides a more detailed analysis of the amount of time (in minutes) each unit, or employee/machine actually uses versus the amount of time that is actually available for work. This analysis also details how much money is being wasted under Sippican’s
…show more content…
Appendix A | Monthly Cost Per Employee | Productive Days per Month | Productive Hours per Day | Cost per Hour | | | | | | | | | Machines | $5,400 | 20 | 12 | $22.50 | | | | | | | | | Engineering | $9,750 | 20 | 6 | $81.25 | | | | | | | | | Production & Setup | $3,900 | 20 | 6 | $32.50 | | | | | | | | | Receiving/Shiping | $3,900 | 20 | 6.5 | $30.00 | | | | | | | | | | | | | | | | | | | | | | Product Data | Valves | Pumps | Flow Controllers | Total | | | | | | | | | No. of Components | 4 | 5 | 10 | | | | | | | | | | Cost per Unit | $16 | $20 | $22 | | | | | | | | | | | | | | | | | | | | | | | Direct Labor per Unit | 0.38 | 0.50 | 0.40 | | | | | | | | | | MH per Unit | 0.50 | 0.50 | 0.30 | | | | | | | | | | Setup Hours per Run | 5 | 6 | 12 | | | | | | | | | | | | | | | | | | | | | | | No. of Units | 7500 | 12500 | 4000 | 24000 | | | | | | | | | No. of Runs | 20 | 100 | 225 | | | | | | | | | | No. of Shipments | 40 | 100 | 200 | | | | | | | | | | | | | | | | | | | | | | | Total DLHours | 2850 | 6250 | 1600 | 10700 | | | | | | | | | Total Machine Run Hours | 3750 | 6250 | 1200 | 11200 | | | | | | | | | Setup Hours | 100 | 600 | 2700 | 3400 | | | | | | | | |

Related Documents