Beruflich Dokumente
Kultur Dokumente
Case Summary
Birch Paper Company has some divisions which are Southern Division,
Thompson Division and Northern Division. Every division has score
independently base on profit and return on investment. This company was
implement decentralization system and the profit is increased by
competitive market.
Northern Division has planned a box with special appearance for paper
who produced with Thompson Division. Thompson Division is pay by
Northern Division in designing and its development. Northern Division
asked a bid for that box from Thompson Division and external company.
So, they have three options:
: $ 480
: $ 430
Eire Papers
: $ 432
Facts:
Advices:
Conclusions:
Mr. Kenton should accept Thompson Divisions bid because it creates a
balance within Birch Paper Company. Even it sounds expensive to buy, but
it will give profit for Thompson Division & Southern Division. Then the
profit will come back to the company. It also helps Thompson Division to
operate well thru gaining profit. It also supports in campaign of
decentralization among division in this company. In other words, it will
encourage buying from within company.
the transfer on fees based on a variable and / or fixed costs in the form of:
full cost,the full cost plus a mark-up and a combination of variable cost
plus fixed fee. If there is a transfer pricing conflict in which business units
do not agree to the prices of certain then to do arbitrage.