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The company maintains its competitiveness by providing full services to its customers. For customers looking for a car, the North Country Auto not only provided options for new cars from those three brands, but also provided options to buy used cars from it.
Example service and repair work are quick oil change, auto repair, the body shop work and auto parts supply. Recently, the company adapted a new control system as a strategy to improve its sales and increase its profit. There were five departments within North Country Auto: Originally, these five departments operated as part of one business.
And the performance of each department was not individually evaluated. Under the new control system, all five departments operated as an individual profit center.
However, under this new control system, there were still problems needed to be dealt with, because the business conducted by these departments affected each other. In this case, if one department tried to maximize its profit, it may affect the profit of other departments.
If this high trade-in cost was allocated to other departments, it would be unavoidable that the cost of those departments would increase and their profit would decrease. Therefore, the questions raised from this case would be: In my opinion, I think the parts department and the body shop should not be considered as the profit centers, since most demands for these two departments were from service department.
If these two departments tried to maximize their profit, it would be very difficult for the service department to maintain high profit. In my opinion, the parts department and the body shop should be considered as cost centers.
In addition, the transfer price among all departments should be the market price instead of another price determined internally. And any losses on inter-departmental business like trade-ins should be proportionally allocated to three profit centers: This evaluation method may encourage all managers to focus on selling activities only.
They may ignore other important responsibilities such as cost control or reduction, as well as inventory control. This would encourage the managers to be responsible for overall cost control and profit-making.Looking for HONEYWELL NORTH First Aid Kit, Kit, Plastic Case Material, Workplace, 25 People Served Per Kit (4EY88)?
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Many of these applications . Case North Country Auto - Download as Word Doc .doc), PDF File .pdf), Text File .txt) or read online. Manual solution for case North Country Auto Management Control System.