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For the valves the unit costs barely changed with the costing method, whereas for pumps the unit costs according to the ABC method is around 20% lower than calculted with the standard method.
Applying the different costing methods impacts the calculated gross margins as depicted in the table above. This means, when taking the ABC method perspective we are of the opinion that the other methods can not have been appropriate in light of the huge differences.
In general, the distribution of gross margin between different products has changed. The pumps are more profitable as opposed to former costing methods, whereas flow controllers appear in a much worse light...
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