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The Customer Service Department of Grand Lakes Technologies asked the Publications Department to prepare a brochure for its training program. The Publications Department delivered the brochure and charged the Customer Service Department a rate that was 25% higher than could be obtained from an outside printing company. The policy of the company required the Customer Service Department to use the internal publications group for brochures. The Publications Department claimed that it had a drop in demand for its services during the fiscal year, so it had to charge higher prices in order to recover its payroll and fixed costs.

1. Should the cost to the brochure be transferred to the Customer Service Department in order to hold the department head accountable for the cost of the brochure?

2. What changes in policy would you recommend?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9945531

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