partner in charge
participant is in the organizational hierarchy, the more “incentive points” he or she will receive based on division profit variance. Therefore, top management has experience some concerning behaviors, for the reason that each division aims at more “incentive points” and might be reluctant to reduce its own profit to optimize company profit. Abrams Company’s top management expressed three areas of concern. First, the transfer prices disagreements of parts sold by the product divisions to the AM division. Second, the AM division being treated as a captive customer by the three product divisions. Third, the excessive yearly inventory carried by both the AM division and the three product divisions. Abrams Transfer prices disagreements arise when the part being transfer from a product division to the AM division is strictly an AM division part and market