Lecturer Heskestad started a few years ago a brokerage company located in southern Norway. company has expanded, and is organized into two divisions wholly owned by INVEST AS (Heskestad of course owns 100% of INVEST AS). These two divisions are Bedrift AS and Privat AS. Those two divisions are led by sisters Hansen, and considerable growth is facilitated by the two.

The leaders within a relatively flexible framework can decide the level of the division's annual investments. This applies to both investments in material equipment as well as technology, marketing etc. and intangible investments. Both the two leaders can a lot about accountants, and is responsible for the preparation of both operating accounts and financial accounts for its division (including documentation of significant balance sheet items).

In Bedrift AS, large projects are sold for large builders. They often work with them here

customer over several years to sell a significant number of high-quality apartments. In Privat AS it is sold individual houses and apartments to private customers. The accounts of INVEST AS show one ever increasing share of joint costs. These are central administrative costs associated with CEO Olsen and the staff, respectively. HR, legal, accounting and IT. Today is distributed central administrative costs based on the number of employees in the two divisions. This choice of distribution key affects the bonus to the sisters Hansen who are leaders in the divisions Bedrift AS and Privat AS. The two division leaders both receive a bonus of 15% of the division's result before

tax expense (financial accounts) .The bonus will be zero if the division goes into deficit.

(a) At the Digital Leaders' Meeting on April 2, 2020, there will be a debate about their distribution central administrative costs. Discuss whether such costs should be allocated

on the two divisions and what should be emphasized when choosing a distribution key.

(b) The employment agreement for the Hansen sisters stipulates that the bonus system can changes every other year. Discuss the pros and cons of today's system, and

propose any changes seen in the light of the company's owner (Dosent Heskestad).