CMA 302 – Tutorial Case Study: Final Draft Birch Paper Company 1. Background Birch Paper Company is a medium sized partly integrated company that produces Kraft papers and paperboard. There are four producing divisions and one timberland division which supplies part of the company’s pulp requirements. The divisions are - Northern Division - Southern Division - Thompson Division - Division 4 - Timberland Each
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Birch Paper 1 How would you resolve the transfer pricing conflict? Present calculations to support your arguments. The three bids (per thousand boxes) are as follows: Thompson division: $480 West Paper Company: $430 Eire Papers: $432 West Paper Company is the cheapest of the three although it is an outsider (as is Eire Papers). The manager of the Northern Division‚ William Kenton‚ should be allowed to buy from outside if the quoted price from the inside source is 10% over the
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Birch Paper Company Birch Paper company is a medium-sized‚ partly integrated paper company‚ producing white and kraft papers and paperboard. The company has four producing divisions and a timberland division. The responsibility structure of the Birch Paper Company and all of its divisions is a Profit or Investment Centre‚ which is stated in the case: For several years‚ each division had been judged independently on the basis of its profit and return on investment. Top management had been working
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Birch Paper Company Relevant Information & Equations 1) Birch Paper Company is a producer of paper‚ paperboard‚ and corrugated boxes. The company is integrated‚ consisting of four separate production divisions. One of its divisions‚ Northern Division‚ asked for bids on a special corrugated box. It requested bids from one of its sister division (Thompson Division) and from two outside companies. The issue at hand is whether Northern should accept a bid from its sister division or from one
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Case 6-2 Birch Paper Company 1 Case 6-2 Birch Paper Company "If I were to price these boxes any lower than $480 a thousand‚" said James Brunner‚ manager of Birch Paper Company’sThompsonDivision‚ "I’d becountermanding my order of last month for our salesmento stop shaving their bids and to bid full-cost quotations. I’ve been trying for weeksto improve the quality of our business‚and if I turn around now and acceptthis job at $430or $450 or somethingless than $480‚I’ll be tearing down this
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Case Analysis of Women’s Health Agency (WHA) Rohan Kumar Jha(34093) Sahithi Katikaneni(34094) Sanjay Makwana(34095) Santosh Kumar(34096) Sudhir Kumar(34103) A) Situation analysis:- Women health agency is an endeavour to provide FP services to rural poor women in developing countries where Islam is main religion‚ so women are only limited to house hold hence to utilize women resource they started to provide FP services which include simple contraception methods. Within six months
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BIRCH PAPER COMPANY Overview Birch Paper is a classic case that provides an excellent opportunity to present‚ analyze‚ and evaluate transfer pricing issues. In only two pages‚ the case presents a common business situation involving the relationship between three divisions and suggests several typical transfer pricing solutions: (1) at variable cost; (2) at full cost; (3) at full cost plus profit; (4) at market price; and (5) at a negotiated price. This setting facilitates the discussion of the
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Northern Division of Birch Paper Company should buy corrugated boxes for a new product internally from the Thompson Division at a transfer price higher than the market price‚ or from one of their external suppliers. Also‚ should the vice president of Birch Paper Company take any action on the bidding price or final purchase decision for one internal division to another internal division? EXECUTIVE SUMMARY Birch Paper Company is a medium sized‚ partly integrated paper company which contained
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Birch Paper Company Information given (All costs are for quantity of 1000) 1. If Northern accepts the bid from Thompson Thompson companies Out of Pocket costs for 1000 boxes = $400 70% of Thompson Out of Pocket costs = Selling price of Southern division (line and corrugating medium) Hence‚ selling price of Southern = 70% * 400 = $280 Hence‚ Out of Pocket costs for Southern = 60% 280 = $168 2. If Northern accepts the bid from West No out of pocket costs Thompson and Southern 3. If Northern accepts
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Birch Paper Company Individual Case Strategy & Key Success Factors: Birch Paper (BP) company is structured in such a way that it is decentralized‚ and each division acts as a profit centre. Furthermore‚ it uses vertical integration with examples such as Timberland division supplying pulp‚ and the Thompson Division (TD) providing printing and colouring. This strategy‚ which composes of decentralization along with the design of profit centres indicates a profit
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