Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 48

Choice of Strategic Business Unit Hamilton-Jones, a large consulting firm in Los Angeles, has experienced rapid growth over the last five years. To better serve its clients and to better manage its practice, the firm decided two years ago to organize into five strategic business units, each of which serves a significant base of clients: accounting systems, executive recruitment and compensation, client-server office information systems, manufacturing information systems, and real-estate consulting. Each client SBU is served by a variety of administrative services within the firm, including payroll and accounting, printing and duplicating, report preparation, and secretarial support. Hamilton-Jones management closely watches the trend in the total costs for each administrative support area on a month-to-month basis. Management has noted that the costs in the printing and duplicating area have risen 40 percent over the last two years, a rate that is twice that of any other support area.
Required Should Hamilton-Jones evaluate the five strategic business units as cost or profit centers Why How should the administrative support areas be evaluated