...Birch Paper Company * Is a medium sized, partly integrated company * Three products, white and Draft papers and paperboard * The company is decentralized- both authority and responsibility * Seems like most of their decisions are based on profits and ROI * Northern and Thompson division together designed box for Northern division * Thompson division was reimbursed by Northern division for it’s designing and development * Apart from Thompson’s bid they also get two different offers from outside companies * Company policy where each division manager had full freedom and discretion to buy from anywhere * Thompson’s most materials from within company but sales mostly outsiders * If Thompson get bid, materials to be procured from Southern division * 70% of out of pocket costs of $400 were above materials * This constituted 60% of selling price * The Northern division received bids on 1000 boxes: - Thompson division- $480 - West Paper Company- $430 - Eire Paper Company- $432 * Eire paper Company dilemma: -Purchase (1000 boxes) outside linear board from Birch with special printing from Thompson at $90 plus $30 for printing -“Competitive market where higher costs cannot be passed on, how can we buy own supplies at 10% higher than market rate?” * Thompson division felt they didn’t receive profit for their development work, so they marked up cost on production of the box * Team 1 assessment that Northern division should...
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...Birch Paper Company Question 1 Which bid should Northern Division on accept that is in the best interests of Birch paper company? Answer: Thompson division even through the bid from west paper seems at first to be the best choice. In you calculate out the cost you find that Thompson actually has the lowest costs associated with them. Cost involved: ✓ Costs for Thompson are a:Linearboard and corrugating medium: cost $ 400x 70% * 60% - $168 plus out of pocket: $400x 30% = 120, for a total cost of $ 288. ✓ Cost for west papers would be a total of $ 430. ✓ Cost for Eire papers would be $ 90x 60% - $ 54 (Southern) plus $ 25 (Thompson), and their supplies of $ 432 – 5 - 432 = $ 312 for a total of $ 391. Question 2 Should Mr. Kenton accept this bid? Why or why not? Answer: Mr. Kenton should not accept the bid from west because it isn’t in the best interest of the company, but at the same time with the transfer policy that exists, it is really up to him what is in the best interests of his division. I believe he should accept the bid from Thompson because not only will it result in the lowest cost, but also it will encourage buying from within the company. Question 3 Should the vice president of Birch paper company take any action? Answer: Yes. As if no orders come from top management Kenton would accept the lowest bid. The vice president of Birch should take action in order to remedy the overall problems associated with this transfer pricing...
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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 of the outside companies. It should be noted that Thompsons bid is substantially higher than the bids received from the outside company. Relevant information pertaining to the three bids are provided below. 2) Thompson Division a) Bid $510 per 1000 boxes b) Thompson is marking the product up by 24.5% for a profit of $100. - $410 x 24.5% = $510 per 1000 boxes c) Thompson’s out of pocket expenses per 1000 boxes amount to $410 - 75% or $307.50 of the $410 represents the cost of linerboard and corrugating medium which will be purchased from its sister division Southern. That leaves $102.50 remaining and designated to other out of pocket costs per 1000 boxes. - $410 x 75% = $307.50; $410 - $307.50 = $102.50 out of pocket costs per 1000 boxes. d) If Thompson gets the order from Northern it will buy its linerboard and corrugating medium from the Southern Division of Birch. - Southern’s out of pocket costs for both liner and corrugating medium were about 65% of its...
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...Allium cepa Pea Pisum sativum Peanut Arachis hypogaea Potato Solanum tuberosum Pumpkin Cucurbita pepo, Cucurbita maxima Spinach Spinacia oleracea Sweet potato Ipomoea batatas Tomato Lycopersicon esculentum Watermelon Citrullus lanatus ~ andi fayian 28 ~Apple - MalusBlue Bindweed - Solanum dulcamara * Bird's Nest - Daucus carota * Bird's Nest Plant - Daucus carota * Birch - Betula spp. * Black Birch - Betula lenta, Betula nigra * Bolean Birch - Betula papyrifera * Canoe Birch - Betula papyrifera * Cherry Birch - Betula lenta * European Weeping Birch - Betula pendula * European White Birch - Betula pendula * Gray Birch - Betula alleghaniensis * Mahogany Birch - Betula lenta * Paper Birch - Betula papyrifera * Red Birch - Betula nigra * River Birch - Betula nigra, Betula lenta * Silver Birch - Betula papyrifera * Spice Birch - Betula lenta * Sweet Birch - Betula lenta * Water Birch - Betula nigra * Weeping Birch - Betula pendula * White Birch - Betula papyrifera, Betula pendula * Yellow Birch - Betula alleghaniensis * Bittercress - Barbarea vulgaris, Cardamine bulbosa, Cardamine hirsuta * Hairy Bittercress - Cardamine hirsuta * Bittersweet - Solanum dulcamara * Trailing Bittersweet - Solanum dulcamara * Bitterweed - Any plant in the Ambrosia genus, specially Ambrosia artemisiifolia; Artemisia trifida; Helenium amarum * Blackberry - Rubus spp., Rubus pensilvanicus...
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...The Coat is a children's picture book about a magical journey of a man and his coat. Standing alone in a field the coat feels abandoned; until a man comes along and claims the coat as his own. The coat takes the man on a magical life changing journey with the use of unexpected insights of disappointment and life’s struggles (Tunell, 2008, p. 25). This well-crafted story book has amazing folk tale style writing, antique type illustrations that accompany the old English styled text creating a musical component; capturing the author’s point of view and portraying the personalities of the characters getting the story across to the audience (Tunnell, 2008, p. 18). As you read the story the illustrations change as the man feelings change, colour is added as the man begins to feel confident and happy with his new life (Tunnell, 2008, p. 18).The right words used throughout the story book allows the reader to picture themselves within or as part of the story, “The coat stood in a paddock at the end of a row of strawberries”, “It was buttoned up tight” (Hunt, 2012, p. 1). Figurative language allows the reader to see and comprehend how the characters are feeling, giving depth and appeal to the book and keeping the reader engaged, “What a waste of me” the coat yelled (Hunt, 2012, p. 3). In addition to figurative language, understatements allow the reader to clearly see how the coat is feeling and draw a conclusion of the fact the coat may be upset or disappointed (Tunnell, 2008, p 21). Tunnell...
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...It is said that people who love the snow are addicted, by traveling to be with the snow. Winter was a rough season in A Separate Peace written by John Knowles, because it is about unraveling the truth between Gene and Finny relationship. The relationship between Gene and Finny’s is put on the test by their friendship, their true personality, and the forgiveness between one another. Gene and Finny went to the Devon river, and at the river Finny told Gene, “we'll jump together to cement our partnership,” (Knowles 31). Knowles specifically uses the words “cement our partnership”, because he is trying to explain that Finny is telling Gene that when they jump off the tree together they become closer friends. Friendship is moreover shown when Knowles writes, “jump together” by both Finny and Gene jumping together to show that their friendship is being created. Through this quote Knowles, is letting the readers know that Finny’s and Gene have created a relationship by becoming closer friends. Gene always thought of the rivers having personalities since he had said, “the Devon school was astride these two rivers [Naguamsett river, and Devon river]” (Knowles 76). Knowles uses “astride these two rivers” to acknowledge that there are two different rivers, one river represents Gene, and one represents Finny. Knowles includes the Naguamsett river, and Devon river’ to let us know that the Naguamsett river is lack of innocence, and Devon is innocence. Just as the two unlike rivers, Gene and...
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...Birch Paper Company Internal Environmental Analysis What they do? – Birth Paper Company is a medium sized, partly integrated paper company, producing white and kraft papers and paperboard. They also convert paperboard into corrugated boxes with printing and colour on the outside surface. Where they operate? – Birch operates 4 production divisions for paper, paperboard, and corrugated boxes as well as a timberland division to supply part of the company’s pulp requirements. How well are they doing? – The company’s profit and competitive position has improved in the last few years since decentralization of profit responsibility. Divisions appear to be doing well in their respective markets: • Southern division runs below capacity at times and has excess inventory, but market price has not noticeably weakened as a result of oversupply. • Thompson Division is in a position to bid full-cost quotations to improve the quality of their business. Key Players • James Brunner, manager of Thompson Division which produces corrugated boxes. • William Kenton, manager of Northern Division (designed specialty display box in conjunction with Thompson Division). • Manager of Southern Division (produces and could potentially supply Thompson with linerboard and corrugating medium for specialty boxes). • Commercial Vice President (analyzing the cost structures of the various divisions). External Environmental Analysis/Industry Analysis Competitors –...
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...1. Which bid should Mr. Kenton accept? Mr. Kenton should accept the low bid of the West Paper Company at $430 per thousand. He has an obligation to make the best business decisions for his division, which means taking the lowest legitimate and reasonable bid. By accepting the West bid, the division will save 10.4% compared to the bid of the Thompson division. If the Thompson bid were within a few dollars of the low bid, as the one from Eire Paper, it would be more reasonable to accept the bid. Also, it is at least nominally the policy of the Birch Company to accept the lowest bid, since the vice president knows the Kenton will accept the lowest bid barring any outside intervention. It is also the policy of the company to expect that inter-division bids meet the going market rate. By rejecting the Thompson division bid, Mr. Kenton shows Mr. Brunner that he will abide by both policies, and that he won’t accept unreasonably high bids. Mr. Brunner will thus be more likely to make lower bids in the future. 2. Which bid is in the best interest of Birch Paper Company? Although accepting the lowest bid would not be advantageous for the Thompson division, accepting the lowest bid is in best interest of the company. This case does not state the fixed costs that would become sunk costs if the Thompson division were to not produce the boxes, however, the division will not lose profit margin on boxes where production has not even started. Similarly, the Northern Division cannot...
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...Company Name: Birch Paper Company Company is traded on the NYSE (XXX) Corporate Headquarters: Website: General Description of the Firm Birch Paper Company was a mid-sized, partially integrated paper company, in the production of white and craft papers and paperboards. There are 5 division, as seen below, to Birch Paper Company. For many years, the divisions were looked at individually as far as its profits and returns were concerned. Thompson Thompson Division 4 Division 4 Division 4 Division 4 Southern Southern Northern Northern Birch Paper Company Birch Paper Company I The Northern Division had designed a display box and asked for bids from their Thompson division and two outside companies. If Thompson winds the bid, they will most likely buy material from the Southern division. When calculating the information provided, Thompson actually has the lowest costs associated with this, and spreads the wealth, if I must say, to other divisions of The Birch Paper Company as well. Mr. Kenton, the Manager of the Northern Division, should not accept the bid from West Paper because it is not in the best interest of the company, but at the same time with the transfer policy that exists, it is really up to him what is in the best interest of his division. Mr. Kenton should accept the bid from Thompson because not only will it result in the lowest cost, but it will encourage buying from within his own company. The Vice president of Birch Paper Company should...
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...GOA INSTITUTE OF MANAGEMENT Birch Paper Company Submitted by, Chandra Mouli Kavi Section C Roll no. 2010132 1. What is the immediate economic impact to the company of sourcing the product to either WEST PAPER or EIRE? Mr. William Kenton, manager of the Northern Division, should be permitted to choose the alternative that is in Northern division's own interests. The transfer price policy gives him the right to deal with either insiders or outsiders at his discretion. If he is unable to get a satisfactory price from the inside source, which is Thompson division, he should be free to buy from outside. The three bids from Thompson division, West Paper Company and Eire Paper Company are $480, $430 and $432 respectively. Below mentioned are the costs involved while taking Thompson division, West Paper Company and Eire Paper Company into consideration. a) Costs for Thompson division Linearboard and corrugating medium : $400 x 70% x 60% = $168 Out of Pocket Total Cost : $400x30%=120 : $288 b) Costs for West Papers = $430 c) Costs for Eire Papers Outside Linear (Southern) Printing (Thompson division) Own Supplies Total Cost : $90x60%= $54 : $25 : $312 : $391 Since all the transfer prices in the company are calculated at costs, the Northern Division should accept the bid for Thompson division as it has the lowest costs. Accepting the bid based on lowest costs would also enable Birch Paper Company to earn the highest profits available. 2. What are the possible...
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...Birch Paper Case 3 General ways a decentralized firm can handle transfer pricing 1) Direct intervention by top management - If this were an extraordinarily large order or if internal transfers were rare, this would be the best solution…but this order represents less than 5% of the volume of all divisions involved. - The disadvantage of direct intervention is that top management could become swamped with pricing disputes, and individual division managers lose the flexibility and other advantages of autonomous decision making. 2) Centrally established transfer price policies - Externally based market prices are generally considered the best basis for transfer pricing when a competitive market exists for the product and market prices are readily available. - A drawback is that this method may require a change to the compensation/incentive system of Division managers Market price-based transfer pricing – A policy that sets transfer price at the market price or a small discount from the market price. From the company’s perspective, this is fine as long as the supplying unit is operating at capacity. Cost basis policy – A seller operating below capacity should transfer at the differential cost of production (variable cost). A seller operating at capacity should transfer at the market price. A seller operating below capacity is indifferent between providing the product and receiving a transfer price equal to the seller’s differential outlay cost or not providing...
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...This suggests a place far from town and set deep in the country. “Stopping by Woods on a Snowy Evening” is set in a remote woods, far from any homes. Each location in the settings of the poems is remote and far from city life. This suggests that the narrator is accustomed to the countryside and its way of life and that he most likely enjoys this type of life. The narrator also has an appreciation of nature. This is immediately evident in the fact that each poem is centered on nature and uses the themes of nature to establish the narrator’s points. Each poem involves an interaction with nature, such as a ride in the woods and swinging from birch branches. Beyond the interactions with nature, the natural also works to mark moments of emotional significance to the narrator. “Birches” recalls a fond memory of swinging from birch branches and also brings to view the narrator’s desire to experience that freedom again, “So was I once myself a swinger of birches./ And so I dream of going back to be” (41-42). The...
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...Mr. Kenton should accept the lowest bid from their choice of suppliers. In this instance, Eire Paper would be the ideal choice as its price per thousand boxes is lowest at $430. Managers are graded on division profits, not company wide. The incentive scheme needs to be set up as to benefit the Thompson Division, since their profits will be lower. The bid from the Thompson division is in the best interest of Birch Paper Co. Since the Thompson division is a part of the Birch Paper Co., buying from them leads to less money coming from out of their pocket. Even though the price is technically higher, the actual cost is lower because a portion of the money stays in the company and is not part of their out of pocket costs. As a result, the company as a whole is more profitable. Lead time is also a factor to acknowledge, as Birch Paper Co would be able to purchase the products sooner, track the products easier, and receive the products in a timely fashion. If they were to outsource, this would not be the case. The VP should intervene in the situation because the company’s profitability is at stake. If the VP would not intervene then top management would accept the lowest bid, although the lowest bid does not benefit the company as a whole. While this example is less than 5% of total volume, the reason the VP needs to intervene is because it could have adverse effects in the future if similar issues arise between division profits versus company profits. By hiring the Thompson...
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...A Tale of Two Best Friend’s Childhood As someone with a sister two years older than me, I knew about the daunting summer reading task mandatory for Honors English at North Providence High School. That daunting task is reading the 617 page book A Prayer for Owen Meany by John Irving. Since my sister still had her copy of the book, I started reading before finals even ended way back in June, hoping to read about twenty pages a day to keep the torture in small doses. However, John Irving’s novel was far from torture. I tried to stick to my schedule of only twenty pages a day just so keep me occupied throughout the summer, but I failed miserably, and finished A Prayer For Owen Meany a week after finals. The book consists of motifs such as baseball, religion, friendship, war, inappropriate humor, school, and family which are highly relatable, regardless of gender or age. One incredible attribute to the story A Prayer For Owen Meany is how almost everything connects. As the reader I so easily overlooked “the shot” and wondered why Owen practiced it with John countless times. Clearly Owen would never be tall enough to play for the Gravesend Academy basketball team, and Owen was not even a fan of the sport basketball. However, at the very end of the book the importance of John and Owen’s shot is revealed. Irving writes, “’READY?’ he said; I passed him the Chicom grenade and opened my arms to catch him. He jumped so lightly into my hands; I lifted him up, as easily as I had always...
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...Birch Paper Company Birch Paper Company Question 1 Which bid should Northern Division on accept that is in the best interests of Birch paper company? Answer: Thompson division even through the bid from west paper seems at first to be the best choice. In you calculate out the cost you find that Thompson actually has the lowest costs associated with them. Cost involved: ✓ Costs for Thompson are a:Linearboard and corrugating medium: cost $ 400x 70% * 60% - $168 plus out of pocket: $400x 30% = 120, for a total cost of $ 288. ✓ Cost for west papers would be a total of $ 430. ✓ Cost for Eire papers would be $ 90x 60% - $ 54 (Southern) plus $ 25 (Thompson), and their supplies of $ 432 – 5 - 432 = $ 312 for a total of $ 391. Question 2 Should Mr. Kenton accept this bid? Why or why not? Answer: Mr. Kenton should not accept the bid from west because it isn’t in the best interest of the company, but at the same time with the transfer policy that exists, it is really up to him what is in the best interests of his division. I believe he should accept the bid from Thompson because not only will it result in the lowest cost, but also it will encourage buying from within the company. Question 3 Should the vice president of Birch paper company take any action? Answer: Yes. As if no orders come from top management Kenton would accept the lowest bid. The vice president of Birch should take action in order to remedy the overall problems associated with...
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