The company Polaris AB has the following composition of its revenues and expenses in 2019: Revenue / piece SEK 125 Variable costs / pieces SEK 55 Fixed costs SEK 4,200,000 Polaris AB is considering purchasing a new machine for production for SEK 2,400,000. The machine estimated to last for 15 years. Due to the digitalisation of the machine, which causes an increase in productivity, so this machine is estimated to cause a cost reduction of SEK 150,000 / year due to lower staffing costs. This is valid for 7 years, which is the economic life. This investment is also estimated to cause a revenue increase of SEK 350,000 / year. After the economic the lifespan is estimated to be able to sell the machine for SEK 400,000. The company uses a discount rate 12%. The company uses a mark-up calculation when calculating manufacturing costs. Now studying a product named XY734. In the mark-up calculation, they distribute the manufacturing costs (TO) with direct salary as the base of charges, while the material cost (MO) is distributed with direct material as a base of orders. Below is a summary of the financial outcome for the year 2020.

a) Explain the differences between expenses and costs related to the company's operations. b) Calculate, and explain the significance, of the critical volume in 2019 for Polaris AB, according to the information above. And calculate the critical turnover the same year for Polaris AB according to the information above. Explain how this information can be used in the company. c) Calculate a lot the total fixed costs can amount to in 2019 if Polaris AB wants to insure that the result will be SEK 2,000,000 at a volume of 75,000 units.

d) Calculate the present value of the investment in question and decide, and justify, based on the result if the investment should be made or not. e) Calculate the pay-back time of the investment and decide, and justify, based on the result whether the investment should done or not. f) Determine the size of the investment's capital value ratio and decide, and justify, based on the result if the investment should be made or not. g) Calculate the post - calculated manufacturing cost of the product XY734 in the year 2020, according to surcharge calculation model that Polaris AB uses. h) What would the post-calculated manufacturing cost of the XY734 amount to if the company instead used a division calculation? i) Which of the calculation models in data g (surcharge calculation) and h (division calculation) would you recommend Polaris AB to use? Motivate your answer. j) The company's new economist (Ida) spoke the other day with the CEO (Rolf) regarding the charge bases that used in the company. Ida wondered if it was not time to review these to increase if possible the precision of the calculations. Rolf then replied that he had a hard time seeing the reason for this "because of course always in industrial companies use direct materials as a basis for distribution material costs and direct salary to allocate manufacturing costs. That's what we're always done and that is what we will always do . Discuss Rolf's answers! In cases where the company compiles grant calculations, they usually use the variable costs as special costs. Discuss two decision situations where this form of standard use of variable costs such as special costs can be considered problematic based on the grant calculation perspective (please reason based on the cost summary for 2020 above).

Purchase Total Outcome: Costs 2020: the factory (all amounts in 1000SEK) Manufacturing department Manufacturing XY734 Car Kit Material 800 180 135 Monthly salary 2 600 1 600 800 Depreciation Painting Assembly Commanly Commanly 30 50 Commanty 20 1 000 800 1 215 7 300 900 400 100 50 950 Rent 500 70 50 620 Electrical 200 40 Various 100 357,5 1 517,5 23 171,75 725 Amount 935 2 620 3 400 20 000 20 000 1 780 5 000 263 957,5 11 305,50 35 000 33 500 Number according to budget piece Number according to outcome piece 10 000 4 500 9 000 Purchase Total Outcome: Costs 2020: the factory (all amounts in 1000SEK) Manufacturing department Manufacturing XY734 Car Kit Material 800 180 135 Monthly salary 2 600 1 600 800 Depreciation Painting Assembly Commanly Commanly 30 50 Commanty 20 1 000 800 1 215 7 300 900 400 100 50 950 Rent 500 70 50 620 Electrical 200 40 Various 100 357,5 1 517,5 23 171,75 725 Amount 935 2 620 3 400 20 000 20 000 1 780 5 000 263 957,5 11 305,50 35 000 33 500 Number according to budget piece Number according to outcome piece 10 000 4 500 9 000