Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 44

Profit Centers Charleston Manufacturing Company, a maker of building products for commercial and industrial construction, has four divisions: bathroom fixtures; roofing products; adhesives, paints, and other chemicals; and flooring. Each division is evaluated on its profit as determined by the annual financial report, and the profit figure is used to determine the division managers' compensation. The firm has continued to grow in both sales and profits over the recent years, but top management has observed that it is not growing as fast as other firms in the indus­try. Moreover, the building products business is experiencing strong overall growth due in part to the rapid increase in construction in the mid-atlantic states where Charleston competes. The firm's CEO is concerned that it is losing ground in the industry at a time of improving opportunities. The CEO believes that the problem might be in the firm's performance measurement system and sets up a task force to determine how the firm should proceed.
Required You are assigned to lead the task force. What are your suggestions for the CEO regarding Char­leston's performance measurement system