Scenario
Hamilton and Barry, a large regional public accounting firm, consists of three major departments: Audit , Tax, and Management Advisory Services (MAS). Gary Premark, head of Management Advisory Services, and Jan McAndrews, partner in charge, had the following conversation.
Jan : “ So far, this has been a good year for MAS, Gary. We’re very pleased with the way you increased your client base and billing is profitability. As you can see, the total costs of your department rose at a faster pace last year than the year before.”
Gaty : “ My profitability is just fine or would be if I weren’t forced to use the inefficient services of this firm. Look at my photocopying costs ! These are way out of line ! I’d be better off using Kopykats a block away.”
Jan: “Gary, as you know, we went to an in- house Photocopying Department to provide convenience and security. If it costs a little more, so be it. Besides, the convenience of just walking down the hall to get your reports and bids copied outweighs any small increase in cost allocation.”
Gary: “ Look, Jan, I don’t mind paying a little extra for convenience, but this allocation is much more than a little extra. My department is going to boycott photocopying until this problem gets resolved.”
Jan : “ Don’t take that step just yet. Carol Morton is in change of photocopying. Let’s get some answers from her first.”
Two days later, Gary, Jan, and Carol Morton, executive assistant in charge of the photocopying service, meet in Jan’s cffice.”
Carol: “ Gary , Iunderstand you have some questions about the way photocopying is run. Let me assure you that we work very hard to keep costs down while providing topnotch service. Your department was charged only for the copies you made.”