West's operating division is supported by several support departments such as human resources, accounting, and the IT development department. The IT department must seek out business from the operating division?that is, the projects they work on must be mutually agreed to and paid for by the operating division. The IT development group is required to charge the operating division for services at cost. The President was wondering what type of responsibility centre the IT development group should be. What benefits and problems do you see in structuring the IT development group the way the company has, and does it lead to goal-congruence and motivation? Lily Le

Required: Make a memo that addresses the President's concerns. Ensure your report addresses the quantitative and qualitative aspects of the issues raised.

Appendix A

West Corporation presents the following data for 2021 and 2022:

1. Units of KEB produced 2. Selling price 3. Direct materials (m?) 4. Direct materials costs per m* 5. Manufacturing capacity for KES 6. Total manufacturing conversion costs 1. Manufacturing conversion costs per unit of capacity (Row 6 + Row 5) 8. Selling and customer-service capacity 9. Total selling and customer-service costs 10. Cost per customer of selling and customer- service capacity (Row 9+ Row 8) 201 40,000 $100 120,000 $10 50,000 units $1,000,000 $20 30 customers $720,000 24,000 2022 42,000 s1o 123,000 s 50,000 units $1,100,000 522 29 customers 725,000 525,000