Organizational Structure and Performance Evaluation

Timberline Corporation is a multi-divisional manufacturing
company. Each of the two division managers has responsibility for sales, costs
and profitability. Division I has three manufacturing plants, while Division 2
has four plants that produce a variety of products as requested by the
divisional marketing department. The divisional marketing department is
responsible for setting prices, determining product mix, managing advertising,
and meeting income projections. The division manager is responsible for
coordinating production and marketing activities across the various levels
within the divisions. Sales and operating data for each division are as

Division 1 Division 2

Sales 10,000,000 6,000,000

Cost of goods sold 6,000,000 4,200,000

Gross Margin 4,000,000 1,800,000

Operating Expenses 3,500,000 1,000,000

Operating Income 500,000 800,000

Average Assets 8,000,000 7,000,000


A. Construct an organization chart that illustrates the
various levels of responsibility within Timberline.

B. Classify each level according to the responsibility
centers identified in this chapter

C. Identify appropriate performance measures for each level
of responsibility. Justify your answer.

D. Calculate ROI for the two divisions. Evaluate the results
of your calculation.