North Country Auto, Inc

 North country auto , inc . Was Was a company the dealer being also had authorization to to serve some brands a car as it ford , saab , and volkswagen .North country auto having two  partners , namely george geo rge liddy and andrew jones .Andrew jones is the possessor po ssessor noerth country auto making their first since the company is established , while george liddy new join the last few years .When george liddy join , companies experienced changes inside the system control company management .  North ountry Auto, Auto, !nc. has five departments or business units, i.e. New ar "ales, #sed ar "ales, "ervice, $arts, and %ody "hop. %efore &r. 'iddy joined the company, North ountry Auto, !nc. all departments and business units operate as one business entity (centralization). &anagers of each business unit to be rewarded with a fixed monthly remuneration and bonuses that are subjectively determined the top management of the performance of each manager. &r .'iddy assume that the system did not provide the motivation to managers and employees to work better for the company .%ecause of it , mr .'iddy make changes by applying a decentralized system against bisnis*unit relations and the responsibility of business units in the company .%y applying decentralization , given the trust as the center business units profit ( profit center and operate as if they are companies that stand alone. +his change has had an impact on the system change in return or given incentive.Any mana manage gerr besi beside dess obta obtain in basi basicc sala salary ry of beri berifa fatt fixe fixed, d, also also get get a bonu bonuss in acco accord rdan ance ce denganperformance department, for example based on a percentage of gross profits.!n this way each department manager motivated to do better particularly in improving the performance of the department of each.+his seems to be the weakness of excellence as well as for the new system of  the usoal congruence happened due to the implementation of a decentralized system this.

Answer :

-. omputing omputing the the profita profitability bility of transac transaction tion described described Sales

$5000

Gross Profit

--/ 01

Number of Units Sales Commision

Overhead Cost Profit

0.

221 344

!n my opinion , will be better if the transfer pricing done based on the price of the market  price ) .!n accordance with market price not mean the same with the price of retail , but in accordance with the market price when the company outside do long*term cooperation with north country auto .5owever , the company north country auto , inc . !ntroduced a  bonus for the manager based on a percentage of gross profit the department business units .Not fair when the department one must provide resources for the department of the other   by not taking the margin of iota ( for example when using full cost in the transfer   pricing ) , so that the profitability of the department concerned will decline caused by  pricing i think this is not favorable .

6. !f one week later it was discovered that trade in goods which was originally can be sold at a wholesale price 3 61 can only are sold in wholesale with the price of 3 6, then that is supposed to be responsible for the loss was manager used car departement. /. 7ears ago there was a loss of 3 14, on used car department .&ay be , the loss was due to the decision to delay car sales in the wholesale price ( that time 3 61 because the manager wants to get a margin greater at a price 3 1 . 1.

!n my opinion , evaluation of the performance of the department or business units north country auto company , inc . %etter measured based on gross profit compared with the full cost profit .+he reason is , because in the full cost profiti , including in it has been non opersional fixed costs and perhaps out of control of the department concerned , such as the depreciation , the cost of advertising , and the commission .

6.

!n a meeting between the land owners, this is george liddy, with managers department, the department made known and performance of the major from being as it is with the  performance of the company as a whole.!t is possible for the granting of the compensation based on the performance of which cause problems relating to the goal congruence it appears.+he solution should do it is to make a change in the the system of  compensation, that compensation or insentive besides based on gross profit but also in co*operation department kesanggupan antardepartemen ( crossfunctional organization ) causing keefisienan 8 s output for the better.