Beth Johnson Was Recently Appointed Vice President of Administration in the Sigma

Essay

Beth Johnson was recently appointed Vice President of Administration in the Sigma Group, a nationwide personal financial planning services firm. Ann Garber, department manager, has just finished reading the most recent memo from VP Johnson, which reads in part:
In order to more efficiently apportion the costs of hard copy duplication, departments will be charged $0.075 per page for all duplicated materials. This new rate replaces the two-tier rate structures of $0.05 and $0.10 per page, and is effective as of the date of this memo. The two tier system was used to charge a higher rate for the more difficult jobs.
"What is she trying to do?" Ann asks. "This new price will drive up my department's duplicating costs so much that we'll have to cut back on how much stuff we have duplicated."
Required:
a. What is the control advantage of any multi-tier pricing (costing) system versus a single price (cost) system?
b. If the new price for duplication reduces total usage of duplicating services, are there any significant disadvantages to such a reduction in usage?