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How should the manager of the maintenance division

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Reference no: EM132515434

Point 1: Universal Power Machinery (MUP) designs and manufactures specialized equipment for a wide range of industries. For a number of years the company's maintenance division, which has been organized as a cost centre, has provided services free of charge to the company's user departments (production, distribution, research, marketing, and so forth).

Point 2: During the last three years, requests for maintenance have increased considerably and as a result of that, quality and timeliness of services provided are becoming a significant issue. In response to that issue, the top management established a task force to review the maintenance division operations. The task force recommended the maintenance division to be converted from a cost center to a profit center and the use of a charge-back system for the maintenance services (i.e. users to be billed for services performed).

Required:

Question 1. How should the manager of the maintenance division be evaluated (i.e. as a cost centre)?

Question 2. If the company switches the maintenance department from a cost centre to a profit centre:

A. What will likely happen to the number of user service requests? Why?

B. How should MUP evaluate the manager of the maintenance division?

Reference no: EM132515434

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