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Assuming that ATCHULO Company Ltd has decided that the investment centre model is unacceptable, what model...

Assuming that ATCHULO Company Ltd has decided that the investment centre model is unacceptable, what model to performance evaluation would you recommend and why?

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Answer #1

The comapny should follow the accounting of the income center rather than the accounting of the company. Each regional center and gateway will be measured on the net income they create under profit center accounting. The investment center will be called the headquarters of each district office and the overall expenses and sales would be assigned to them. It should help them behave professionally when it comes to shipping and handling boxes. The terminals should be supplied with the required funds to carry out the work and should hold records for all profits produced and expenditure. Profits need not be calculated for each terminal, and should not be the basis for judging their performance if calculated. There will be repayment of the funds from time to time.

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