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Line A was aimed at the luxury segment, line B at the upscale segment, and line C at the mass market segment. No markup for parts was realized by service department.
For example, a sales person from Business Unit A may be the main company contact with certain customer, but the orders the customer places with that salesperson may be for likely to pursue such orders Indus corporation case 5 1 all resulting revenues were credited to Unit B.
Finally, when managers know that their respective will not show a profit unless costs, including the allocated share of corporate overhead, are recovered, they are motivated to make optimum long-term marketing decisions as to pricing, product mix, and so forth, that will ultimately benefit and even ensure the viability of of company as a whole.
Some of these common components were sourced externally while others were manufactured inside the company. Second, the performance of each profit center will become more realistic and more readily comparable to the performance of competitors who pay for similar services.
Thus, variance analysis is always important in evaluating management performances. This case was written by Mark C. Let INDUS leverage evolving new technologies to deliver your ideal mission portal and analytics capability that streamlines critical decision-making.
Demand for parts was derived almost completely from other departments. Jones had been part owner since the start of the business. Many dealerships in the area were changing sales compensation to a flat salary plus a partial commission on gross profits generated.
However, if the car was obviously of below average quality, the used car department was asked for their estimate of value. Liddy strongly believed in the concept of evaluating each department individually as a profit center.
There are two principal arguments against using this measure: Learn more Business Analytics Realize your business and mission-critical needs by deploying analytics tools to develop actionable and real-time, situational awareness capabilities.
A major disadvantage of this measure is that because it excludes non controllable headquarters expenses it cannot be directly compared with either published data or trade association data reporting the profits of Indus corporation case 5 1 companies in the industry.
If one considers the measurement of the manager alone, the solution often becomes evident: First, since the costs incurred by corporate staff departments such as finance, accounting, and human resource management are not controllably by profit center managers, there managers should not be held accountable for them.
The publisher set specific targets for direct profit at each of its newspapers. Under appropriate circumstances, even the production or marketing function can be constituted a profit center, although considerable judgment is required to accomplish this successfully.
They also required their dealerships to maintain an adequate service facility with a crew of trained technicians that, in turn, necessitated carrying an inventory of parts to be used in repairs. Most companies in the United States include some, if not all, of the costs discussed earlier in evaluating the business manager, whether or not they are under his or her control.
Expenses incurred at head quarters, however, are not included in this calculation. The dealership was situated in a upstate New York town with a population of about 20, Managers should be measured against those items they can influence, even if they do not have total control over those items.Contact Us The corporate headquarters for INDUS Corporation, conveniently located in Rosslyn, VA, offers continual contact with our government clients and onsite staff.
In addition, INDUS has numerous onsite locations throughout the country working on a wide range of contracts and services. Indus Corporation Case 5 1 Chapter 5 Case-- Stem Corporation (A)* On December 31,before the yearly financial statements were prepared, the controller of the Stem Corporation reviewed certain transactions that affected accounts receivable and the allowance for doubtful accounts.
CASE SOLUTION. CASE PROFIT CENTER PROBLEMS AMAX Automobiles AMAX Automobiles was a car company with three product lines. Line A was aimed at the luxury segment, line B at the upscale segment, and line C at the mass market segment.5/5(3).
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Mar 04, · Management chapter 5. Chapter 5. Profit Centers. Case 5 – 1. Profit Center Problems. AMAX Automobiles Indus Corporation; Indus was a diversified company operating in a number of niche markets that were largely independent of each other, that is, customer buying decisions in each of these markets were made independently.Download