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1. What type of center is the Charlotte facility? Would you characterize it as an investment center, profit center, revenue center or cost center? Give specific reasons why you chose your answer.

2. What are the advantages and disadvantages of a decentralized organization structure?

3. The Charlotte plant receives some products used in the manufacturing of envelopes, cups and packaging from South Carolina plant. Recently there have been some heated discussions about the prices charged to Charlotte by Timberland, the South Carolina plant. The product, cremodium, has cost Charlotte $80 per batch. This covers all marginal costs incurred by the South Carolina facility. The South Carolina facility is profit center and agues that they can sell cremodium on the open market for $120. Which method, as presented in your text, should be used in this instance and why? Does it make a difference if the South Carolina plant has no idle capacity?

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