Birch Paper Company Case Study
Case 6-2: Birch Paper Company
1. Which bid should Northern Division accept that is in the best interests of Birch Paper Company?
Northern Division should accept the bid of the Thompson division even though the bid from West Paper seems at first to be the best choice. In you calculate out the cost you find that Thompson actually has the lowest costs associated with them. Costs for Thompson are as follows: Linearboard and corrugating medium: Cost $400x70%= $168 plus Out of Pocket: $400x30%=120 for a total cost of $288.Costs for West Papers would be a total of $430, and costs for Eire Papers would be $90x60%= $54 (Southern) plus $25 (Thompson), and their supplies of $432-5-36= $312 for a total of $391.
2. Should Mr. Kenton accept this bid? Why or why not?
Mr. Kenton should not accept the bid from West because it isn’t in the best interest of the company, but at the same time with the transfer policy that exists, it is really up to him what is in the best interests of his......
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