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Using the information, please answer (preferably typed) the question below. Question: The city of Mountainvale hired its first city manager 4 years ago. She favored
Using the information, please answer (preferably typed) the question below.
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The city of Mountainvale hired its first city manager 4 years ago. She favored Management by objectives philosophy and accordingly set up many profit responsibility centers, including a Sanitation Department, a Utility Department, and a repair shop. For many months, the sanitation manager had been complaining to the utility manager about wires being too low at one point in the road. There was barely clearance for large sanitation trucks. The sanitation manager asked the repair shop to make changes in the clearance. The repair shop manager asked, Should I charge the Sanitation or the Utility Department for the $2,000 cost for making the adjustment? Both departments refused to accept the charge, so the Repair department refused to do the work. Late one day, the top of a sanitation truck caught the wires and ripped them down. The Repair Department made an emergency repair at a cost of $2,600. Moreover, the city lost $1,000 of utility revenues (net of variable costs) because of the disruption of service. Investigation disclosed that the sanitation truck had failed to clamp down its top properly. The extra 2 inches of height caused the wire to be caught. Both the sanitation and utility managers argued strenuously about who should bear the $2,600 cost. Moreover, the utility manager demanded reimbursement from the Sanitation Department of the $1,000 of lost utility income. Based on the case, you are now being challenged on the decision for making the maintenance department as a profit center, instead of a cost center. Provide rational for treating it as either a cost center or a profit center. Then state which you would recommend. Your discussion must provide positive rational for each - separate paragraphs. Minimum of 150 wordsStep by Step Solution
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