Cost Accounting Wilkerson Case Essay

1931 WordsJan 11, 20158 Pages
Wilkerson Company HBS Case Analysis I. Competitive Situation of the Wilkerson Company’s Product Lines The Wilkerson Company is experiencing a gloomy financial performance as indicated by the recent dip in the corporation’s overall profits. The company primarily produces valves, pumps, and flow controllers. Each of the three products are encountering varying competitive situations, however, the pumps are weathering the most dire situation in terms of financial performance and has been attributed as the main cause of the decline in company profits. Wilkerson had been forced to slash prices on their highly recognized and high-volume commodity product line, the pumps, in efforts to maintain their competitive ranking as a major pump supplier and in response to the reduction of pump prices by competitors in the marketplace. As a result of the adjustment, gross margin of pump sales in March 2000 has plummeted to 19.5%, significantly lower in comparison to their planned gross margin of 35%, as well as contributing to the decline in pre-tax margin to 3%, a considerable disparity from their previous admirable 10% margins. The company produces flow controllers, which are customized to meet varying requirements of different industries. Thus, this product line demands more components, production runs, labor, and shipment than both valves and pumps. Unlike pumps, flow controllers are not confronted with pressures of extremely competitive market. Customer demand has not faltered even after raising the prices of the product by more than 10%. In reference to the Product Profitability Analysis of March 2000, the actual gross margin of 41% is higher than the expected gross margin of 35%, indicating the promising financial performance of flow controllers. Overall financial health appears to be better than the pumps. The Wilkerson Company is traditionally a

More about Cost Accounting Wilkerson Case Essay

Open Document