UNIVERSITAS INDONESIA Review Question 17-1 Brickley, Smith, and Zimmerman, Managerial Economics and Organizational Architecture, 4th ed. Tugas Mata Kuliah Dosen Dr.Mustafa Edwin Nasution Disusun Oleh Ari Wardani 0706306560 Jonathan HP.Babrayan 0906498295 Oktavia 0806479074 Herni Kurniawati 0806479055 Jakarta Okober 2009
STATEMENT OF AUTHORSHIP Kami yang bertandatangan dibawah ini menyatakan bahwa makalah/tugas terlampir adalah murni hasil pekerjaan kami sendiri.tidak ada pekerjaan orang lain yang kami gunakan tanpa menyebut sumbernya. Materi ini tidak /belum pernah disajikan /digunakan sebagai bahan untuk makalah/tugas pada mata pelajaran lain kecuali kami menyatakan dengan jelas bahwa kami menggunakannya Kami memahami bahwa tugas yang kami kumpulkan ini dapat diperbanyak dan atau dikomunikasikan untuk tujuan adanya plagiarism. : Ari Wardani NPM : 0706306560 : Jonathan HP.Babrayan NPM : 0906498295 : Oktavia NPM : 0806479074 : Herni Kurniawati NPM : 0806479055
Review Question 17-1 Brickley, Smith, and Zimmerman, Managerial Economics and Organizational Architecture, 4th ed. Presented By : Ari Wardani 0706306560 Jonathan HP.Babrayan 0906498295 Summary Architecture Organization STRATEGY : Basis of Competition (Price,Quality,Service) Choice of Industries Organizational Architecture: Decision-right assignment empowering employees Reward system compensating employees Performance-evaluation system evaluating employees Incentive and Action Firm Value Measuring divisional performance Cost centers e.g. manufacturing Expense centers e.g. personnel, accounting Revenue centers e.g. sales, distribution Profit centers combined cost and revenue centers Investment centers profit centers with decision rights on capital outlays 1
Review Question 17 1 Auto fit is a multi divisional firm that produces auto part it has the capacity for annual production of 100 units of a particular parts. The marginal cost of production each unit is $10.These unit price can be sold internally either to other divisions or to external customers. The external market price is $20.The allocated share of corporate overhead for each part produced is $5.Total corporate overhead expenditures do not vary with production of the part.how many units of the part should company produce.what is the theoretically correct transfer price (should the company decide to transfer internally)?. Explain. Summary of Auto Fit produces auto part annual production of 100 marginal cost of production each unit is $10 unit price can be sold internally either to other divisions or to external customers external market price is $20 allocated share of corporate overhead for each part produced is $5 2
Transfer Pricing Price paid for intra-organizational transfers of goods and services Choice determines both distribution of profits among units and overall profits Measurement Costless information profit maximization Asymmetric information Transfer Pricing methods Market base Marginal cost Full cost Negotiated t Transferred at the external market price Transferred at the marginal production cost Transferred at the full cost to avoid wasteful disputes over measuring marginal cost Transferred at the negotiation between manufacturing and distribution cost and consider of opportunity cost 3
Conclusion Transfer between division should be by Market base because information of the intermediate goods (part) is provide. We do not have information about selling price of division with manufactured this part to become one product. And the selling price of the goods not reflected the opportunity cost. The Auto-Fit should produce the part with full capacity because the selling price to the division or external customer based on market price. Thank you Review Question 17-1 Brickley, Smith, and Zimmerman, Managerial Economics and Organizational Architecture, 4th ed. Presented By : Ari Wardani 0706306560 Jonathan HP.Babrayan 0906498295 Supported By : Oktavia 0806479074 Herni Kurniawati 0806479055 4