Managerial Control Essay Example | Topics and Well Written Essays - 1250 words

Managerial Control - Essay ExampleThe performance of every(prenominal) division is evaluated through its Return on Investment (ROI) (Jensen, and Meckling, 1976, 306) and this is the comparable with ACS as well.Millwall Company has been awarded the contract for a specific project. The project requires the member which is manufactured by Reading company. The Reading Company is operating little than full capacity. Millwall has requested to buy the component for his project from Reading. As there is no transfer determine policy of ACS therefore Reading offered Millwall the component at regular price less selling and distribution expense. But this offer was not accepted by Millwall and it has proposed to pay Reading the price which was less than cost of the component.The corporate management of ACS has tried to negotiate between the two companies and offered Reading $10.12 for component. The figure was evaluated by the conclave of standard full manufacturing cost plus 15 percent mar kup. However this suggestion was not accepted by both companies.Reading regularly sells the component at $13 to outsiders. However Millwall estimated the cost figure of the component at $7.60. Reading offered to supply that component to Miilwall at $11.20 which was extracted from regular price i.e. $13 less variable and distribution expenses i.e. $1.20. The figure shows that reading would hasten profit of $1.80 if it supplies the component to Millwall at $11.20.The acceptance of the Readings proposed price by Millwall might have positive effect on the attitude of Readings management toward intra-company business. Firstly, Readings proposed price would be accepted by one of the intra-company of Anderson Customized guarantor (ACS) as it is always better to sell goods to intracompany. Secondly, Reading can also have a profit of $1.80. Though this would be less profit as Reading could have earned more by selling the component to outsiders but the company has to play its part in suppor ting the other companies of the same