AS Beaucoup produces the products Alta, Bergen and Cairo. Direct material is included for 1,000 for each Alta, 600 for each Bergen and 1,800 for each Cairo. The products use resp. 3 hours, 1 hour and 4 hours work per. unit at a price of 440 pr. hour. Total indirect costs are calculated for 21,904,000. The indirect costs are distributed according to the cost method on the number of working hours. Alta sold for 4,200 pr. unit, while Bergen is sold for 1,800 and Cairo for 6,500 per. unit. It is produced resp. 5,000 Alta, 14,000 Bergen and 2,000 Cairo.

1. ABC broke through in the mid-1980s. What was it that did not cost- / the contribution method was longer sufficient?

AS Beaucoup has carried out an ABC analysis of its business and concluded the following distribution of the indirect costs of four different activities:

Activity	Cost driver	Cost	available capital
Ordering	Number of inquiries	3,238,500	4,250
Production	Machine time in hours	10,694,500	36,500
Maintenance	Number of maintenances	2,330,250	1,625
Delivery	Number of orders	3,508,600	2,120

2. What will be the activity rates (additional rates) for the four activities?

AS Beaucoup also examined the consumption of the products by the cost drivers:

Activity	Cost driver	Alta	Bergen	Cairo
Ordering	Number of inquiries	1,678	423	1,494
Production	Machine time in hours	9,674	10,452	13,587
Maintenance	Number of maintenances	433	492	234
Delivery	Number of orders	878	324	632

c) Show the distribution of the total indirect cost of resp. used and available capacity as well construction-based costs (company level).

d) Show the profitability of the three products according to ABC.

e) What will be AS Beaucoup's budgeted result after cost if it does not occur deviation on neither prices, costs nor number of units sold? Will the result after ABC deviate from the result according to the cost method, possibly by how much?

f) AS Pedersen & Co. buys 150 Alta, 875 Bergen and 240 Cairo using 160 orders and 245 order. Will the profitability of the customer AS Pedersen & Co be different if one calculates profitability based on AS Pedersen & Co's consumption of cost drivers in instead of the three products' consumption of cost drivers (explain why). How big will this difference possibly be?

AS Beaucoup produces the products Alta, Bergen and Cairo. Direct material is included for 1,000 for each Alta, 600 for each Bergen and 1,800 for each Cairo. The products use resp. 3 hours, 1 hour and 4 hours work per. unit at a price of 440 pr. hour. Total indirect costs are calculated for 21,904,000. The indirect costs are distributed according to the cost method on the number of working hours. Alta sold for 4,200 pr. unit, while Bergen is sold for 1,800 and Cairo for 6,500 per. unit. It is produced resp. 5,000 Alta, 14,000 Bergen and 2,000 Cairo.

1. ABC broke through in the mid-1980s. What was it that did not cost- / the contribution method was longer sufficient?

AS Beaucoup has carried out an ABC analysis of its business and concluded the following distribution of the indirect costs of four different activities:

Activity	Cost driver	Cost	available capital
Ordering	Number of inquiries	3,238,500	4,250
Production	Machine time in hours	10,694,500	36,500
Maintenance	Number of maintenances	2,330,250	1,625
Delivery	Number of orders	3,508,600	2,120

2. What will be the activity rates (additional rates) for the four activities?

AS Beaucoup also examined the consumption of the products by the cost drivers:

Activity	Cost driver	Alta	Bergen	Cairo
Ordering	Number of inquiries	1,678	423	1,494
Production	Machine time in hours	9,674	10,452	13,587
Maintenance	Number of maintenances	433	492	234
Delivery	Number of orders	878	324	632

c) Show the distribution of the total indirect cost of resp. used and available capacity as well construction-based costs (company level).

d) Show the profitability of the three products according to ABC.

e) What will be AS Beaucoup's budgeted result after cost if it does not occur deviation on neither prices, costs nor number of units sold? Will the result after ABC deviate from the result according to the cost method, possibly by how much?

f) AS Pedersen & Co. buys 150 Alta, 875 Bergen and 240 Cairo using 160 orders and 245 order. Will the profitability of the customer AS Pedersen & Co be different if one calculates profitability based on AS Pedersen & Co's consumption of cost drivers in instead of the three products' consumption of cost drivers (explain why). How big will this difference possibly be?