The significant result of the decentralization is the enhancement in the design of the boxes. If Thompson got the order from Northern, it probably would buy its linerboard and corrugating medium from the Southern Division of Birch. The commercial vice president is facing this unusual situation, where he has to decide whether to intervene into, and if yes what should he do and how? How to cite this page Divisions remain competitive in the market. Considering that, this costhas been sustained by an internal department and if a lower rate is paid to an outdoors provider itwould indicate a loss to the Thomson Division. The responsibility structure of the Birch Paper Company and all of its divisions is an Investment Centre. After that, Northern has three offers from Thompson and other two outside companies West and Erie. Sorry, but copying text is forbidden on this website.
Kenton had received three bids. Evaluation of Alternatives Alternative 1: This decision will give a boost to the operations of the Thompson and Southern division. Bottling Company Case Study Bottling Company Case Study The following sample of bottles of sodas were selected at random following allegations presented by the customers that the bottles of the brand of soda in the company contained less Ounce of soda than the advertised sixteen 16 ounces of product. Long term interests of the company are not compromised. We will be also tackling the roles, functions and responsibilities of a controller in an organization.
It also printed and colored the outside surface of the boxes. If Thompson winds the bid, they will most likely buy material from the Southern division. Each division is operated by its manager independently, and each of them is assessed based on its profit and return on investment. Words: 1528 - Pages: 7. The deal will bring some business to both the Thompson and Southern divisions of the Birch company.
Should the vice president of Birch Paper Companytake any action? They partnered with Hulu to sponsor its first original series. The selling prices for the supplies would have been favorable. A seller operating at capacity should transfer at the market price. Kenton, manager of the Northern division should not accept the bid from Thompson division. Early in the year, its Northern Division designed a special retail display box in conjunction with the Thompson Division, which was equipped to make the box. The Thompson bid is in the best interest of the company in terms of cash flows and long-term profit.
Words: 361 - Pages: 2. It has three products: white paper, Kraft paper and paperboard. I missed the opening statements but obviously they did not have a plea bargain and Wilkers obviously pleaded not guilty. The policy can be put regarding the transfer pricing which would be based on the opportunity cost of the divisions. If he is unable to get a satisfactory price from the inside source, which is Thompson division, he should be free to buy from outside.
How about make it original? Without any intervention from the vice president of Birch Paper Company, the Northern division would most probably accept the lowest bid from West Paper Company. Words: 1510 - Pages: 7. The company is integrated, consisting of four separate production divisions. Relevant cash flows should be incremental and after-tax. A portion of its paperboard output was converted into corrugated boxes by the Thompson Division, which also printed and colored the outside surface of the boxes. This report will highlight the issues while providing a complete paper and recommendation for you to consider. It discusses the thorough analysis of the organization problems and how the company will solve them.
Brunner to reduce the prices for its. The most common transfer prices are 1 Market Price 2 Cost-based Price which includes actual full cost, target or predetermined full cost, cost plus a profit and variable cost 3 Negotiated Price and 4 Dual Prices. If Eire Papers win the bid, they have agreed to buy outside liner from the Southern division and print their boxes from the Thompson division. Words: 712 - Pages: 3. Accepting this bid will mean no business for the Thompson and Southern divisions at all, which already are not in a good company state. Success of each division will not guarantee the optimal success fir the whole firm. Kenton should accept the bid from Thompson because not only will it result in the lowest cost, but it will encourage buying from within his own company.
Each box includes three parts: an inside linerboard, an outside linerboard, and the corrugating medium. Introduction Birch Paper Company Case Study Birch Paper Company's Northern division was faced to choose between three bids for an upcoming project from either an internal source or external companies looking to capture the job. In the controversy described, how, if at all, is the transfer price system dysfunctional? Case: Birch Paper Company was a medium-sized, partly integrated paper company, producing white and kraft papers and paperboard. . This behavior sends conflicting messages to the divisions and could lead to disruptions and confusion.