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    Organizational Structure and Performance Evaluation

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    Timberline Corporation is a multi-divisional manufacturing company. Each of the two division managers has responsibility for sales, costs and profitability. Division I has three manufacturing plants, while Division 2 has four plants that produce a variety of products as requested by the divisional marketing department. The divisional marketing department is responsible for setting prices, determining product mix, managing advertising, and meeting income projections. The division manager is responsible for coordinating production and marketing activities across the various levels within the divisions. Sales and operating data for each division are as follows:

    Division 1 Division 2
    Sales 10,000,000 6,000,000
    Cost of goods sold 6,000,000 4,200,000
    Gross Margin 4,000,000 1,800,000
    Operating Expenses 3,500,000 1,000,000
    Operating Income 500,000 800,000
    Average Assets 8,000,000 7,000,000

    A. Construct an organization chart that illustrates the various levels of responsibility within Timberline.
    B. Classify each level according to the responsibility centers identified in this chapter
    C. Identify appropriate performance measures for each level of responsibility. Justify your answer.
    D. Calculate ROI for the two divisions. Evaluate the results of your calculation.

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    Solution Preview

    Please see attached file for answers.

    Requirement A

    Requirement B
    The plants are cost centers, while the marketing departments which also include the division manager's office are profit centers.

    Requirement C
    Hence, the appropriate performance ...

    Solution Summary

    The organizational structures and performance evaluation is examined.