個案總覽

Spreadsheet Supplement for case 190148.

Explores how a cost system can help support a firm's decision to change strategies. In the process, students are exposed to a simple activity-based cost system. Also examines Siemens policy for transferring products between sales and manufacturing divisions. Transfer pricing is based on standard costs generated from their cost system. The case is unique in that the organizational linkage between the product costing system and the transfer pricing system is explored.

Explores how a cost system can help support a firm's decision to change strategies. In the process, the students are introduced to a simple activity-based cost system. Siemens Electric Motor Works found itself facing an increasingly competitive environment and so made a decision to move from mass production of specialty motors to the production of small lots of custom motors. In doing so, they found their old cost system led them to poor decision making. By switching to a simple activity-based system, more accurate product costs were computed, facilitating better divisional performance.

Examines Siemens' policy for pricing products transferred between the manufacturing and sales divisions of their Electric Motor Works, where both are profit centers. It is unique in that the organizational linkage between the product costing system and the transfer pricing system is highlighted. The issues raised center around the behavior induced by the transfer pricing system coupled with each manager's incentive to increase divisional profits. In addition the students will have an opportunity to discuss the appropriateness of both the transfer pricing system and the profit center structure of the organization.