Consider each of the following independent scenarios:a. Terrin Belson, plant manager for the laser printer factory of Compugear Inc., brushed hishair back and sighed. December had been a bad month. Two machines had broken down,and some factory production workers (all on salary) were idled for part of the month.Materials prices increased, and insurance premiums on the factory increased. No way outof it; costs were going up. He hoped that the marketing vice president would be able topush through some price increases, but that really wasn’t his department.b. Joanna Pauly was delighted to see that her ROI figures had increased for the third straightyear. She was sure that her campaign to lower costs and use machinery more efficiently(enabling her factories to sell several older machines) was the reason why. Joanna plannedto take full credit for the improvements at her semiannual performance review.c. Gil Rodriguez, sales manager for ComputerWorks, was not pleased with a memo fromheadquarters detailing the recent cost increases for the laser printer line. Headquarterssuggested raising prices. “Great,” thought Gil, “an increase in price will kill sales andrevenue will go down. Why can’t the plant shape up and cut costs like every othercompany in America is doing? Why turn this into my problem?”d. Susan Whitehorse looked at the quarterly profit and loss statement with disgust. Revenuewas down, and cost was up—what a combination! Then she had an idea. If she cut backon maintenance of equipment and let a product engineer go, expenses would decrease—perhaps enough to reverse the trend in income.e. Shonna Lowry had just been hired to improve the fortunes of the Southern Division ofABC Inc. She met with top staff and hammered out a 3-year plan to improve the situation.A centerpiece of the plan is the retiring of obsolete equipment and the purchasing of stateof-the-art, computer-assisted machinery. The new machinery would take time for theworkers to learn to use, but once that was done, waste would be virtually eliminated.Required:For each of the above independent scenarios, indicate the type of responsibility center involved(cost, revenue, profit, or investment).
Consider each of the following independent scenarios:
a. Terrin Belson, plant manager for the laser printer factory of Compugear Inc., brushed his
hair back and sighed. December had been a bad month. Two machines had broken down,
and some factory production workers (all on salary) were idled for part of the month.
Materials prices increased, and insurance premiums on the factory increased. No way out
of it; costs were going up. He hoped that the marketing vice president would be able to
push through some price increases, but that really wasn’t his department.
b. Joanna Pauly was delighted to see that her
year. She was sure that her campaign to lower costs and use machinery more efficiently
(enabling her factories to sell several older machines) was the reason why. Joanna planned
to take full credit for the improvements at her semiannual performance review.
c. Gil Rodriguez, sales manager for ComputerWorks, was not pleased with a memo from
headquarters detailing the recent cost increases for the laser printer line. Headquarters
suggested raising prices. “Great,” thought Gil, “an increase in price will kill sales and
revenue will go down. Why can’t the plant shape up and cut costs like every other
company in America is doing? Why turn this into my problem?”
d. Susan Whitehorse looked at the quarterly
was down, and cost was up—what a combination! Then she had an idea. If she cut back
on maintenance of equipment and let a product engineer go, expenses would decrease—
perhaps enough to reverse the trend in income.
e. Shonna Lowry had just been hired to improve the fortunes of the Southern Division of
ABC Inc. She met with top staff and hammered out a 3-year plan to improve the situation.
A centerpiece of the plan is the retiring of obsolete equipment and the purchasing of stateof-the-art, computer-assisted machinery. The new machinery would take time for the
workers to learn to use, but once that was done, waste would be virtually eliminated.
Required:
For each of the above independent scenarios, indicate the type of responsibility center involved
(cost, revenue, profit, or investment).
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